<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:27193.wais]
S. Hrg. 109-661
HEALTHCARE IN THE DISTRICT OF COLUMBIA: ACCESS TO PRIMARY CARE AND
AFFORDABLE HEALTH INSURANCE
=======================================================================
HEARING
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
SPECIAL HEARING
APRIL 6, 2006--WASHINGTON, DC
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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_____
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27-193 PDF WASHINGTON : 2006
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COMMITTEE ON APPROPRIATIONS
THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana HARRY REID, Nevada
RICHARD C. SHELBY, Alabama HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
J. Keith Kennedy, Staff Director
Terrence E. Sauvain, Minority Staff Director
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Subcommittee on the District of Columbia
SAM BROWNBACK, Kansas, Chairman
MIKE DeWINE, Ohio MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi (ex ROBERT C. BYRD, West Virginia (ex
officio) officio)
Professional Staff
Mary Dietrich
Kate Eltrich (Minority)
Administrative Support
LaShawnda Smith
C O N T E N T S
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Page
Opening Statement of Senator Sam Brownback....................... 1
Statement of Brenda Donald Walker, Deputy Mayor, Children, Youth,
Families, and Elders, District of Columbia..................... 2
Dr. Gregg Pane, Director, Department of Health, District of
Columbia....................................................... 2
Prepared Statement of Brenda Donald Walker....................... 4
Statement of Randall Bovbjerg, Principal Research Associate, The
Urban Institute................................................ 7
Barbara Ormond, The Urban Institute.............................. 7
Prepared Statement of Randall R. Bovbjerg........................ 9
Statement of Sharon Baskerville, Executive Director, D.C. Primary
Care Association............................................... 13
Prepared Statement........................................... 15
Statement of Maria Gomez, President and Chief Executive Officer,
Mary's Center for Maternal and Child Care...................... 20
Prepared Statement........................................... 22
Statement of Christine Reesor, Medical Clinic Coordinator, D.C.
Spanish Catholic Medical Clinic of Catholic Community Services. 30
Prepared Statement........................................... 31
Statement of Lawrence Mirel, Former Commissioner of Insurance,
Securities and Banking for the District Of Columbia............ 33
Prepared Statement........................................... 34
Statement of Edmund Haislmaier, Research Fellow, Center for
Health Policy Studies, The Heritage Foundation................. 55
Prepared Statement........................................... 58
Prepared Statement of Senator Mary L. Landrieu................... 66
Prepared Statement of The HSA Coalition.......................... 67
HEALTHCARE IN THE DISTRICT OF COLUMBIA: ACCESS TO PRIMARY CARE AND
AFFORDABLE HEALTH INSURANCE
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THURSDAY, APRIL 6, 2006
U.S. Senate,
Subcommittee on the District of Columbia,
Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:32 p.m., in room SD-138, Dirksen
Senate Office Building, Hon. Sam Brownback (chairman)
presiding.
Present: Senator Brownback.
opening statement of senator sam brownback
Senator Brownback. The hearing will come to order. Thank
you all for joining us this afternoon.
Today we've convened a hearing of expert witnesses to
better understand the health status and insurance status of
District of Columbia residents, the access to preventative and
primary care in the District of Columbia and ways to increase
the availability and affordability of health insurance for
those who live and work in this city.
About 17 percent of District adults have no health
insurance at all, some 50,000 people at any one time, and
75,000 at some time during the year. One in ten African-
Americans are uninsured, and one in three Latinos are
uninsured. This compares to about 1 in 20 Caucasians uninsured.
We have a chart up, showing that, on the side. I'm concerned,
however, that this rate of uninsurance may actually be higher
than what even the charts say.
I believe that it is an important goal to help people gain
access to affordable health insurance, because, as Mr.
Bovbjerg, of The Urban Institute, will soon testify, people
with health coverage have better access to medical care, and
are measurably healthier, than those who are not insured. I
believe that access to preventative and primary care is crucial
for helping individuals live longer, healthier lives, and more
productive lives.
Aside from poor overall health outcomes, individuals who
are not insured usually do not seek routine and preventative
care, and often use hospital emergency rooms to access
treatment for nonemergency ailments. The cost of so-called
``free'' emergency room treatment is not free at all, because
it is passed on to insured patients, via higher premiums, and
to other payers.
We look forward to hearing from our witnesses today about
the healthcare needs of those they serve, available services
for the patients they care for, and their perception of the
barriers to expanding health insurance coverage. We also look
forward to hearing ways that we can reach and enroll uninsured
persons who live and work in the District.
Senator Landrieu may join us a little later, but if she
can't make it her statement will be inserted in the record.
They're having a caucus right now on a topic, immigration,
which has certainly grabbed all of us lately, so I don't know
if she'll be here or not, but if she is, I'll recognize her for
any statement that she might have.
We've combined our panels, and I'm appreciative of all of
you being here. We'll run the clock at 5 minutes and each of
you can put your written statements in the record, if you'd be
willing to do that, and then testify on the topics that you're
interested in and what you think we need to be considering. And
I then want to ask some questions of you.
We'll have testifying Ms. Brenda Donald Walker, Deputy
Mayor of the District of Columbia for Children, Youth,
Families, and Elders; Mr. Randall Bovbjerg, principal research
associate of The Urban Institute; Ms. Sharon Baskerville,
executive director of the D.C. Primary Care Association; Ms.
Maria Gomez, president and CEO, Mary's Center for Maternal and
Child Care; Ms. Christine Reesor, medical clinic coordinator,
D.C. Spanish Catholic Center; Mr. Lawrence Mirel, former
commissioner of insurance securities and banking for the
District of Columbia; and Mr. Edmund Haislmaier, research
fellow, Center for the Health Policy Studies at The Heritage
Foundation.
I appreciate all of you joining us today. Your full written
statement will be put into the record.
And let's start with Ms. Walker, and your testimony. Thanks
for joining us.
STATEMENT OF BRENDA DONALD WALKER, DEPUTY MAYOR,
CHILDREN, YOUTH, FAMILIES, AND ELDERS,
DISTRICT OF COLUMBIA
ACCOMPANIED BY DR. GREGG PANE, DIRECTOR, DEPARTMENT OF HEALTH, DISTRICT
OF COLUMBIA
Ms. Walker. Thank you so much.
Good afternoon, Senator Brownback and members of the staff
and the subcommittee.
I am Brenda Donald Walker, District of Columbia Deputy
Mayor for Children, Youth, Families, and Elders. I am
accompanied here today with--by Dr. Gregg Pane, who is director
of the District's Department of Health. We are very pleased to
be here to discuss the status of healthcare in the District.
Over the past 7 years of the Williams administration, there
has been significant progress on several fronts, but there is
still much work to be done.
The most significant accomplishment of this administration
is in the area of health coverage. Five years ago, the Mayor
created the D.C. Healthcare Alliance, a program that offers
comprehensive health coverage to all District residents under
200 percent of poverty who don't qualify for Medicaid. The
Alliance provides care to roughly 30,000 District residents,
and it has led to decreases in emergency room visits and an
increased use of primary care. The District is now the only
jurisdiction in the United States that offers health coverage
to all residents under 200 percent of poverty. The Mayor has
proposed to expand coverage even further in fiscal year 2007 by
expanding Medicaid for children up to 300 percent and adding an
adult dental benefit.
Despite high rates of insurance, though, not every District
resident has ready access to medical services. To address this,
the Mayor has strongly supported the medical homes initiative,
which you will hear more about, to improve the quality and
availability of primary care in underserved neighborhoods. In
addition, he has proposed to build a new private hospital, in
partnership with Howard University, to provide access to
medical care and emergency care for residents on the eastern
side of our city.
Yet, the District continues to face some very dire health
statistics. Our rates of chronic and communicable illness are
much higher than the national average, especially in some parts
of the city. In particular, we are concerned about diabetes,
hypertension, asthma, infant mortality, HIV/AIDS, and substance
abuse.
In the past year, we have developed several new initiatives
to address the root causes of illness. We have just launched an
innovative model of healthcare in our jail facilities to
improve inmate care and provide continuity of care when inmates
are released back into the community. We are also focusing on
HIV/AIDS, and the Mayor has announced a high-level task force
to develop a full plan. In the meantime, we are partnering with
George Washington University to improve surveillance and also
to encourage widespread HIV testing.
We know, of course, that there is much more to be done, and
we welcome opportunities to work with the Federal Government,
especially on projects that could serve as demonstrations for
the rest of the country. One such initiative is a comprehensive
prevention and disease management program that has three
different components--a major media campaign to communicate
health behaviors and to--to communicate health behaviors
necessary to stay healthy, a health outreach program that we
think will address some of the people who are eligible for
coverage, but who are not yet insured, and also to provide
peer-to-peer health education and a chronic disease
collaborative to improve care management among District health
providers.
Another area for potential partnership is the creation of a
National Capital Area Regional Health Information Exchange, to
develop a model of data sharing among healthcare providers
across the region.
Another potential Federal/local initiative would be a
partnership to further expand health coverage in the District.
While we lead the Nation in offering health coverage to low-
income individuals, there is still a gap for people who earn
too much to qualify for public programs, but can't afford
private insurance.
Thank you for this opportunity to testify. Dr. Pane or I
will be happy to answer questions that you have. Thank you.
Senator Brownback. Thank you very much.
[The statement follows:]
Prepared Statement of Brenda Donald Walker
Good afternoon Senator Brownback and distinguished Members of the
committee. I am Brenda Donald Walker, District of Columbia Deputy Mayor
for Children, Youth, Families and Elders. I am here today with Dr.
Gregg Pane, director of the District's Department of Health. I am very
pleased to be here to discuss the status of healthcare in the District
and opportunities for the District and the Federal government to work
together to improve health outcomes in our Nation's capital. Over the
past 7 years of the Williams Administration, we have made significant
progress on several fronts, but there is still much work to be done.
The most significant accomplishment of this administration is in
the area of health coverage. Five years ago, the Mayor made the
difficult decision, supported by Congress and the former Financial
Control Board, to close the financially and medically troubled District
of Columbia General Hospital. This closure was met with significant
opposition from the District of Columbia hospital industry, employees
of the hospital, and healthcare advocates, who made doomsday
predictions about the impact of the closure. However, by closing the
hospital, the Mayor freed up significant local funds which were used to
start the DC Healthcare Alliance (the Alliance), a program that offers
comprehensive health coverage to all District residents under 200
percent of the Federal Poverty Level (FPL) who don't qualify for
Medicaid. The Alliance, now 5 years old, is routinely lauded as one of
Mayor Williams' most important accomplishments. Through the Alliance,
we now offer primary and preventive care, as well as choice of
healthcare provider, to roughly 30,000 District residents who used to
receive most of their care in the District of Columbia General
emergency room. Since the early days of the Alliance, ER visits among
the Alliance population have decreased, inpatient admissions have
declined and primary care visits have increased. We have also begun to
see a decline in ``avoidable hospitalizations'', which are preventable
through adequate primary and preventive care. This trend is
particularly evident for District children. This means that we are
keeping District residents healthier and spending taxpayer dollars more
wisely. Over the next several months, we will be significantly
improving the ability of the Alliance to monitor health outcomes by
transitioning it to a managed care model, similar to our District of
Columbia Healthy Families Medicaid program.
In addition to the creation of the Alliance program, Mayor Williams
implemented SCHIP (State Children's Health Insurance Program) in 1997,
expanding Medicaid coverage to children and parents from 100 percent to
200 percent of poverty. With the expansion of Medicaid and the creation
of the Alliance, the District of Columbia is now the only jurisdiction
in the United States that offers health coverage to all residents under
200 percent of poverty. This expansive health coverage policy is
reflected in District statistics on the uninsured. In 2003, the Kaiser
Family Foundation found that the District's rate of uninsurance was
just 9 percent compared to a national rate of 21 percent. In a more
recent study, the Urban Institute found that just 5 percent of the
District population is both uninsured and over 200 percent of poverty,
without access to a public insurance program. The Mayor has proposed to
expand coverage even further in his recent fiscal year 2007 budget
submission. The budget offers Medicaid coverage for children up to 300
percent of poverty, and it closes a major gap in the Medicaid benefit
package by adding an adult dental benefit.
Despite these high rates of insurance in the District, not every
District resident has ready access to physician and hospital services.
A 2004 report by the Rand Corporation and Brookings Institution,
sponsored by the District of Columbia Primary Care Association, showed
that in some neighborhoods, particularly on the east side of the city,
as many as 25 percent of the population has no regular source of
primary care. In addition, there is little access to specialty,
diagnostic, inpatient and emergency care on the east side of the
District. Many patients travel long distances to reach doctors, health
centers and hospitals, which are primarily located in the Northwest
quadrant of the District of Columbia, even though the highest
concentrations of chronically ill residents and emergency transports
come from the east side of the city.
To address this issue of lack of access to care, the Mayor has
supported two major initiatives. The Medical Homes initiative, in
partnership with the District of Columbia Primary Care Association and
the Brookings Institution, is designed to increase the availability of
primary care health centers in underserved neighborhoods and to improve
the quality of care in health centers across the District. The National
Capital Medical Center proposal, in partnership with Howard University,
to build a new private hospital is designed to ensure access to
specialty, diagnostic, inpatient, emergency, and trauma care to
residents on the eastern side of the city. Through these two
initiatives, the city will provide capital funding to spur the
development of new private nonprofit healthcare facilities in
underserved neighborhoods. As a result, residents with either public or
commercial health insurance will have somewhere to use their insurance
cards.
Health coverage programs for low-income individuals are largely in
place in the District, and initiatives to expand the private healthcare
delivery system are moving forward. However, the District continues to
face some very dire health statistics. Our rate of chronic illness is
much higher than the national average, especially in some parts of the
city. For example, 20 percent of Ward 8 residents and 13.5 percent of
Ward 7 residents reported being diagnosed with diabetes in 2004.
Nationally the figure is 7.0 percent.\1\ The District has one of the
Nation's highest asthma rates. In 2002, 13 percent of Ward 1 residents
and 12.3 percent of Ward 7 residents reported having been diagnosed
with asthma, while the national was just 8.2 percent.\2\ In 2003, the
District experienced an alarming rate of death from hypertension of
64.2 per 100,000, which is significantly higher than the national
average of 7.5.\3\
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\1\ Behavioral Risk Factor Surveillance System, 2004; analysis by
the National Center for Chronic Disease Prevention and Health
Promotion, Division of Nutrition and Physical Activity, Centers for
Disease Control and Prevention, available at http://apps.nccd.cdc.gov/
brfss/list.asp?cat=DB&yr=2004&qkey=1363&state=All.
\2\ Centers for Disease Control and Prevention (CDC). Behavioral
Risk Factor Surveillance System Survey Data. Atlanta, Georgia: U.S.
Department of Health and Human Services, Centers for Disease Control
and Prevention, 2004. Available at http://apps.nccd.cdc.gov/brfss/
list.asp?cat=AS&yr=2004&qkey=4416&state=All.
\3\ DC Department of Health Vital Statistics, 2003.
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In addition, infant death rates, primarily attributable to poor
prenatal care and risky behavior during pregnancy, are very high in
certain parts of the city. For example, in Wards 8, 7, and 5, the
infant death rates are 18.4, 12.9, and 12.6 per 100,000 respectively,
compared to a national rate of 6.9.\3\ Our rates of communicable
disease, most notably HIV/Aids, are deplorable. In 2004, the rate of
HIV/Aids infection in the District was 179.2 per 100,000 residents
compared with 15.0 nationally.\4\ And our rate of substance abuse is
9.6 percent, 52 percent higher than the nationwide rate of 6.3 percent.
Approximately 60,000 residents--nearly 1 in 10--are addicted to illegal
drugs or alcohol.
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\4\ Table 14, HIV/AIDS Surveillance Report: Cases of HIV Infection
and AIDS in the United States, 2004, Volume 16, National Center for
HIV, STD and TB Prevention, Centers for Disease Control and Prevention,
Department of Health and Human Services, 2005. Available at http://
www.cdc.gov/hiv/stats/2004SurveillanceReport.pdf.
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I will note a few silver linings in our health outcomes data. Some
of our health statistics are better or equal to national averages. For
example, the District's rate of school age immunization is now 96
percent, one of the highest in the Nation.\5\ The District death rate
from strokes is significantly lower than national average, with a rate
of 37.4 per 100,000 compared with 54.3 nationally in 2003.\6\ The
prevalence of smoking in the District has gone down to 20.8 percent and
is now equal to the United States average.\7\ I will also point out
that the District frequently compares very unfavorably to States and to
the national average, where a more apples-to-apples comparison to other
urban areas would show more comparable data.
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\5\ Immunization rates data, District of Columbia Public Schools.
\6\ DC Department of Health Vital Statistics, 2003.
\7\ America's Health Ranking, United Health Foundation, 2005.
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Despite these silver linings, the District's health status in
general is in need of substantial improvement. We believe that over
time, health coverage and access to medical facilities will improve
these outcomes. But in order to significantly move our health
indicators, we must attempt to address the root causes of illness, many
of which are linked to individual behaviors and lifestyles, and we must
target hard-to-reach populations. We have recently started a number of
initiatives designed to address health outcomes.
We have taken very seriously a report on the HIV/AIDS epidemic in
the District of Columbia, authored last year by the District of
Columbia Appleseed Foundation. We are beginning to implement many of
the recommendations from that report. First, just this week, we are
announcing a high-level HIV/AIDS Task Force to develop a full plan to
address the epidemic. Second, we are also pleased to announce an
academic public health partnership with George Washington University
School of Public Health--a partnership that will help us improve the
surveillance activities and monitoring of our local epidemic. Third,
consistent with President Bush's State of the Union message about the
importance of HIV testing and outreach to communities with high rates
of HIV infection and the CDC's initiative to make HIV testing routine
in all medical settings, the District of Columbia will soon undertake
an initiative to encourage widespread testing, so that everyone in the
District of Columbia knows their HIV status. Finally, also consistent
with President Bush's concerns about services to incarcerated
populations, the District of Columbia will expand HIV testing in the
District of Columbia correctional facilities.
Another area of focus in the past year has been generally improving
corrections healthcare. Just yesterday, the Mayor announced an
innovative new partnership between the District's largest Federally
Qualified Health Center, Unity Health Care, and the Department of
Corrections to provide care to inmates in District jail facilities. The
goal of the partnership is to create continuity of care from community
health facilities to jail health facilities, since much of the
population overlaps. Incarceration is an opportunity to identify and
begin treatment for chronic and communicable diseases. By partnering
with Unity, the District will ensure that treatment continues after
inmates are released into the community. The District is fortunate to
have received significant support through the Robert Wood Johnson
Foundation to implement this new model in October.
To address quality of care for chronic illnesses, both of the
District of Columbia's public health coverage programs, Medicaid and
the Alliance, have selected quality performance metrics and are now
implementing a plan to hold contracted managed care organizations
accountable for improvement on their scores. Ultimately, we plan to
create pay-for-performance incentives to catalyze improvements in
disease management, and ultimately, District-wide health outcomes.
The District's new smoke-free legislation, banning tobacco use in
most restaurants and bars, begins to take effect this week. In
addition, in the past year, the Department of Health sponsored town
hall meetings on healthcare disparities in every Ward of the District.
These forums allowed us to gather information from District residents
and begin to promote healthier lifestyles.
But we know there is more to be done. In our latest strategic
planning cycle, we identified several major initiatives to address
health outcomes that would benefit from a Federal partnership, and also
potentially serve as demonstration projects that, if successful, could
be replicated in other parts of the country.
One such initiative currently in development is a comprehensive,
District-wide prevention and disease management program. This program
would include three different components targeting both healthcare
providers and patients. The first aspect of the initiative would be a
major media campaign targeted at the general District population to
communicate the key behaviors necessary to stay healthy. Supporting the
media blitz, the second component would be a community health outreach
worker program. This program would rely on peer-to-peer education about
how to get screened for and manage chronic illnesses, as well as how to
lead a healthy lifestyle. We would target this program to specific
neighborhoods and populations with negative health indicators. For
example, we could develop a group of Spanish-speaking outreach workers
for the Latino immigrant community or a group of young adult outreach
workers to target teens. Outreach would be conducted in places that
already cater to key target populations, such as churches and barber
shops. The outreach worker model has the added benefit of being a
workforce development program, providing jobs and a career ladder for
members of lower-income communities. The third component of the disease
management initiative would be a District-wide chronic disease
collaborative. Under this model, physicians and community health
centers across the city would work together to simultaneously implement
disease management methods to better track care and outcomes of
populations with chronic illnesses. We believe that this type of multi-
pronged effort to prevent and treat chronic illness is a key step
toward progress on the District's negative health indicators. It would
surely benefit from Federal start-up funds.
As an aside, one challenge in developing such a program is that
currently, Federal funds supporting disease management are narrowly
focused on specific diseases, making it difficult to create programs
that target whole neighborhoods and sub-populations. We have begun a
very positive relationship with the Centers for Disease Control to try
to increase our flexibility, but Federal funds ideally would allow more
broad-based expenditures.
Another area for a potential partnership is the creation of a
National Capital Area Regional Health Information Exchange. Healthcare
data sharing, with appropriate privacy and security protections,
enables better coordination among emergency rooms, primary care
physicians, specialists, and hospitals. This improved coordination
allows primary care physicians to better manage chronic illnesses. It
also decreases the incidence of medical errors and minimizes
duplicative health services, ultimately slowing the growth of public
and private healthcare costs. In addition, the data collected can be
used to improve disease surveillance and healthcare policy-making. The
District and surrounding jurisdictions in Maryland and Virginia are now
in the early stages of developing a Regional Health Information
Organization for the National Capital Region to develop a technical
model and governance structure for health information exchange among
hospitals, physicians, and payors. In the Mayor's Fiscal 2007 budget,
we funded the implementation of electronic medical records for all
medical homes community health centers in the District. This is a major
building block for health information exchange. In addition, we have
begun an exciting pilot program called QuickConnect, which
electronically provides key health records from hospital emergency
rooms to community health centers, enabling them to follow up with
patients who have visited the ER.
As a multi-state region, the National Capital Area is an ideal
location to demonstrate data-sharing, because the ultimate goal is to
foster a national, interstate model for data sharing. In addition, the
region continues to be a target for terrorist attacks, and health data
sharing will be crucial in responding to any major disaster. Finally,
health coverage in this region is largely funded by the Federal
Government, through the Federal Employees Health Benefits Plan,
Medicare, and Medicaid. That means that the expected cost savings of
health information exchange will accrue to taxpayers. We are currently
seeking funding to fully launch the National Capital Area Regional
Health Information Organization. We envision that this organization
will ultimately adopt a self-sustaining business model.
Another potential Federal/local initiative would be a partnership
to further expand health coverage in the District. While we lead the
Nation in offering health coverage to low-income individuals, there is
still a gap for low to moderate income individuals, especially between
200 and 400 percent of poverty. These people earn too much to qualify
for public programs, but they have difficultly affording private
insurance. In the last year, through a Department of Health and Human
Services funded State Planning Grant for Health Coverage, we have
explored numerous options for expanding coverage to this population.
One such model would subsidize private commercial insurance through a
State-run stop-loss pool. Another model would allow moderate income
individuals to buy into District Medicaid and Alliance managed care
plans, with sliding-scale premiums according to income level. We have
also evaluated the Equal Access model, which would open the District of
Columbia Government employee health purchasing pool to private
employers. All of these models would require some level of sliding-
scale subsidy in order to attract members.
Finally, additional Federal funding for our existing District
health coverage programs, Medicaid and the Alliance, would allow us to
continue to expand the District's market-based model for coverage to
the low-income uninsured. With the Alliance, the District moved from a
government-run, safety-net public health system to a market-based
system for covering difficult populations, such as the homeless. As
mentioned earlier, this new model appears to be making significant
improvements to care. Until now, we have been able to budget enough
local dollars to cover all eligible Alliance applicants. The District
currently invests nearly $100 million in local dollars for the
Alliance. However, we have been quite successful in expanding the
Alliance program, and membership has increased steadily, up 25 percent
in the past year alone to over 30,000 members. Soon, it is likely that
demand for the program will outstrip the dollars budgeted for the
program. In order to continue enrolling all eligible District
residents, funding will have to increase in the next several years. The
Federal Government could offer some flexibility that would allow the
Alliance to transition to a Medicaid waiver program, thus qualifying
for Federal funding. Another alternative would be to increase the
District's FMAP rate for Medicaid, which would free up additional local
funds for the Alliance program. Despite that fact that one in four
District residents is covered by Medicaid, the District still only has
a 70 percent FMAP rate, compared to States such as Mississippi, which
have rates as high as 77 percent.
Thank you for this opportunity to testify today. Dr. Pane or I
would be happy to answer your questions.
Senator Brownback. Mr. Bovbjerg.
STATEMENT OF RANDALL BOVBJERG, PRINCIPAL RESEARCH
ASSOCIATE, THE URBAN INSTITUTE
ACCOMPANIED BY BARBARA ORMOND, THE URBAN INSTITUTE
Mr. Bovbjerg. Yes. Good afternoon. I am Randall Bovbjerg.
With me is Barbara Ormond. We're delighted to join you in an
effort to improve health insurance coverage and make the
District a better place to live, work, and do business.
We do work at The Urban Institute, and it is here in the
District. We've also lived here for decades, although I grew up
in Iowa, and Barbara grew up in Georgia.
Our testimony draws on work done for the State planning
grant of the D.C. Department of Health. We thank Dr. Pane. But
I am only speaking for me and Barbara today.
I also would like to pause and thank staff here for
producing these colorful charts on very short order. You can
barely see that, but they are quite colorful.
And I need to acknowledge that I have another colorful
visual aid, sent to me by the Scots-Canadian branch of the
family in honor of National Tartan Day, which was proclaimed by
the Senate in 1998. So, Happy Tartan Day. I find it a useful
reminder.
Senator Brownback. Why didn't you have that on?
Mr. Bovbjerg. Because I am wearing my D.C. flag, which
shows the District Building and the Capitol Building, both.
Senator Brownback. So, it would kind of clash, those two?
Mr. Bovbjerg. It would be difficult. I had a plaid coat,
and my wife made me give it away. I can use it here to
highlight--that we already submitted, but we already submitted
it to the record.
And that will serve to bring us back to the topic of health
insurance, which is, indeed, as you said, Mr. Chairman, a very
important topic, and for precisely the reasons you named. In
short, people get better access to care. They're healthier,
they live longer, they're likely more productive. They do
better, even in communities that have invested heavily in
safety-net facilities to provide care for the uninsured.
There is a lot more detail under the tartan, and I refer
you to that. Let me mention four things very quickly.
The District has a slightly lower rate than the Nation as a
whole, as we just heard. Most of the uninsured work, which is
often unappreciated, they are disproportionately male African-
American, and especially Latino, as the chart just showed. And
they live all over, which I think isn't appreciated. Indeed,
something more than a quarter live in the southeast quadrant of
the District, which is a little bit higher than that share of
the population. But about twice that many live in the northwest
quadrant, which is only slightly less than its share of the
population.
Now let's look at four charts that aren't in the report.
We've got number one up there right away. They're from
different sources, and they look at who has coverage and who
doesn't. This is just a graphic illustration of what we've just
heard, that the District has done a lot for poor people. And
between SCHIP and Medicaid, in the dark color, and this quasi-
insurance program, which is becoming more like insurance over
time, called the Alliance, the District, in theory, offers
coverage to everyone, up to 200 percent of poverty. Not
everyone applies. And if everyone did, the current resources
would not cover them.
Exhibit 2 takes a look at the people who are insured. It
does it by income. And it does it by program eligibility
category and by work status. About 50,000--you mentioned
50,000, Senator--are in this category that is targeted by
either Medicaid or the Alliance. Some of those people, perhaps
half, might be in the Alliance. We don't really know, because
this survey doesn't really ask the question to find out. It
might be half of them have this quasi-insurance coverage
already. On the other side are the same people, but broken out
by work status. And here are the people, that were just
referred to, who have incomes above the public assistance
level, and yet don't have coverage. And there are somewhat over
13,000 of those, on a 3-year average early in the 2000s. This
was a group that the State Planning Grant Advisory Panel
identified as a likely target of subsidy to try to see if they
wouldn't purchase insurance on their own.
Then exhibit 3 compares this group of the uninsured--and
here they are again; this is the uninsured--with the similar
people of the same incomes who have insurance, and how they got
it.
So, what this shows is that if one targets this income
group, the 200 to 400 percent income group, indeed, you capture
the 13,000 people who don't have coverage, but you're also
aiming more or less at the 83,000 of the same income who
already have coverage. And that raises the possibility that
there could be some displacement of those private dollars with
public dollars unless steps are taken to avoid that.
Then exhibit 4 shows the wide variation that would occur
if, indeed, uninsured people were made insured. And this
assumes that the people would get insurance of the type that
people of this income level buy for themselves. And the
variation is enormous. So, you get--would get almost $12,000 in
spending between the insurance coverage and the out-of-pocket
amount for the elderly in fair or poor health, and, at the
other end, you've got under $800 for the kids in excellent
health. So, the average price, the average spending, the
premium could be set targeted at $1,700, but that would not be
enough if disproportionately above-average people were the ones
who signed up. So, that's a significant problem. The insurers
call it ``adverse selection,'' and it's something you'll be
hearing more about.
Thank you very much.
Senator Brownback. Thank you.
[The statement follows:]
Prepared Statement of Randall R. Bovbjerg
Expanding health insurance is a major District government priority.
One manifestation of this priority has been funding analyses under the
State Planning Grant (SPG) won by DC's Department of Health in
conjunction with The Urban Institute. We are the co-Principal
Investigators on this HRSA-funded project. The PI is Brenda Kelly of
DC-DOH.
The reason for promoting insurance is that people with health
coverage have better access to medical care, are demonstrably
healthier, and likely more productive as well. Provision of coverage
improves access more than does subsidizing institutions to provide
safety-net care to the uninsured.\1\ Today's testimony comes from SPG
work, much of it done for DOH's Health Care Coverage Advisory Panel; a
current and a past panel member are also testifying today.
---------------------------------------------------------------------------
\1\ See, e.g., Hadley, Jack and Peter Cunningham. 2004.
``Availability of Safety-Net Providers and Access to Care of Uninsured
Persons,'' Health Services Research, 39(5):1527-1546; see also the DOH/
SPG Advisory Panel's ``Statement of Principles on Expanding Health
Coverage and Safety Net Protection,'' accessible at <http://
www.dcpca.org/index.php?option=com_content&task=view&id=81&Itemid=79>.
---------------------------------------------------------------------------
One major source of information on the uninsured in the District is
our report of October 2005.\2\ The report assesses the rate of
uninsurance (which differs somewhat by survey), who lacks health
insurance, which populations are most at risk of uninsurance, and the
costs of being uninsured. It focused on working-age adults, 19-64, who
are most at risk of uninsurance. Younger Americans are better covered--
through families' private insurance, Medicaid, and the State Children's
Health Insurance program (SCHIP), the last known as Healthy Families in
DC. From age 65 of course, almost everyone is eligible for Medicare.
---------------------------------------------------------------------------
\2\ See Insurance and Uninsurance in the District of Columbia:
Starting with the Numbers, prepared by Jennifer King and the State
Planning Grant Team, accessible at <http://www.urban.org/
url.cfm?id=311234>; the full team is listed at the end of this
testimony.
---------------------------------------------------------------------------
The report sought to improve understanding of the city's uninsured
at a time when District policymakers have been considering various
options to help. In June 2005, legislation was proposed to require
universal health care coverage in the District. In October, the city
made the first $1 million in grants to expand clinic capacity under its
10-year Medical Homes initiative. And $200 million in city funding for
a new hospital is also on the table. This hearing is further evidence
that DOH was prescient in launching the project.
Some of the report's key statistics include:
--About 17 percent of District adults have no health insurance--some
50,000 people at any one time and 75,000 at some time during
the year. (Estimates vary among different surveys, and some of
the uninsured have a form of coverage through the Alliance,
discussed below.)
--Men are three times more likely than women to be uninsured.
--African Americans, 58 percent of District residents, are two-and-a-
half times more likely to be uninsured than whites; Latinos, 9
percent of the population, are eight times more likely.
--The annual cost of health care for the uninsured is estimated at
just over $120 million, about one third each from the uninsured
themselves, from non-insurance funding, and from medical
providers' uncompensated care (some of which is offset by
Disproportionate Share Hospital, or DSH, allowances or other
public funds). If health care coverage were universal, the cost
would increase by about half, but the out-of-pocket cost to the
formerly uninsured would be halved, and uncompensated care
would decrease dramatically.
--Fifty-four percent of uninsured adults are employed, and 22 percent
are temporarily unemployed; only 23 percent are non-workers.
--Twenty-eight percent of uninsured adults have family incomes below
the federal poverty level; 6 percent have incomes at least four
times the poverty level.
--Residents of Southeast Washington make up 23 percent of uninsured
adults but only 19 percent of the population; 47 percent of the
uninsured live in Northwest D.C. versus 54 percent of
population.
Additional insight is available from SPG analyses not presented in
that report. Four key charts are discussed here.
The first chart shows how the District's expansions of public
program makes every resident with family income below 200 percent of
the federal poverty level (FPL) eligible for some form of medical
assistance (Exhibit 1). Medicaid covers the traditional categories to
the FPLs indicated, in recent years augmented by SCHIP, which is
operated as a Medicaid expansion. Since it closed its public hospital
in 2001, the District has also run an innovative, insurance-like
program known as the Alliance. It fills in gaps for people up to 200
percent of FPL for those with incomes above the applicable Medicaid
ceiling and those who are categorically ineligible for Medicaid, such
as childless adults.
Not everyone eligible actually applies, however, and the Alliance
has to date had a budget limit that would not permit it to cover
everyone if they did apply.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
The next chart shows how the District's health insurance glass is
part full and part empty (exhibit 2). It illustrates coverage gaps for
all residents below age 65 by family income and by eligibility category
(left two columns) and by work status (next three columns).
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
About 50,000 people lacked health insurance in the early 2000s,
according to the federal Current Population Survey (CPS), a standard
source of data. About 16,000 were children and parents under 200
percent of FPL, who are targeted by Medicaid (left column). More than
twice this number were non-parents under 200 percent of FPL--those
targeted by the Alliance--about 34,000 people (next column). It is not
reliably known just what share of these are actually in the Alliance,
which is believed not to be captured as ``insurance'' coverage in the
CPS, but up to half of the 50,000 may be. The good news here is that
the number of uninsured is not large. The less-than-good news is that
these data also show that the biggest gap in the District of Columbia
insurance coverage is in the safety net of public programs meant to
cover those with incomes below 200 percent of FPL.
The same uninsured people are shown in the next columns of exhibit
2 (past the first double bar). Here, they are re-categorized by their
work status. Most of the uninsured are in families with a full time or
part time worker. Those between 200 and 400 percent of FPL were
considered by the SPG as potential candidates to receive some form of
new subsidy to encourage purchase of coverage--about 13,000 people.
(The data lack sufficient sample size to estimate the number of no-
worker families above 200 percent of FPL; the numbers are likely
small.)
The third chart compares those without insurance coverage to those
with coverage, again by income level and work status (exhibit 3).
Again, it shows some good news. Among all District of Columbia
residents below age 65, those with insurance outnumber those without
coverage by over 5 to 1. Among those with incomes of 200 to 400 percent
of FPL and not already receiving public help--potential candidates for
subsidy--the ratio is 6 to 1. On the other hand, any new subsidy
targeted only by income levels (200-400 percent of FPL) will apply to
some 82,000 people already covering themselves through private
insurance as well as the uninsured group of only 13,000.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Such new aid can be expected to displace some amount of current
self-help, so that not all of the new public resources go to increase
access to health care--a phenomenon often called ``crowd out''--unless
specific steps are taken to reduce such displacement.
Fourth, the uninsured also differ in age, health status and other
characteristics related to health spending (exhibit 4). The average
level of medical spending per person would be some $1,700 a year if the
entire population of today's uninsured were given coverage similar to
that now obtained by those of comparable incomes. However, the range in
spending by type of enrollee would be substantial, as the exhibit
shows.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Those under age 19 who describe themselves as in excellent health
would account for less than half that amount, while those aged 50-64 in
fair or poor health would be at seven times the average. The policy
implication is that how much a new insurance subsidy will cost depends
upon which people sign up for it.
Thank you for the opportunity to testify today.
Senator Brownback. Ms. Baskerville.
STATEMENT OF SHARON BASKERVILLE, EXECUTIVE DIRECTOR,
D.C. PRIMARY CARE ASSOCIATION
Ms. Baskerville. Good afternoon, Chairman Brownback,
distinguished members of the subcommittee.
My name is Sharon Baskerville, executive director of the
D.C. Primary Care Association (DCPCA). I just have to plug our
mission. We are a group of stakeholders committed to creating a
community-based primary-care-focused healthcare system that
guarantees D.C. residents the right care in the right place at
the right time.
We work with all of these people to try to create
solutions. And I can say that since DCPCA was founded, in 1996,
healthcare coverage has been expanded to over 50,000 D.C.
residents, and we've had our fingers in all of those
expansions, the result of a combination of progressive policies
in a city whose pockets of concentrated poverty have increased
like no other city in the country over the last decade. We have
more than doubled, in the last decade, our areas of
concentrated poverty. To battle the growing concentration of
poverty, the District has been in the forefront of targeting
new insurance expansions to medically vulnerable communities
while also maximizing its local investment in healthcare
dollars.
Just a sample of these targeted Medicaid coverage
initiatives--and I think you see, on this map, currently, in
2002--and I think we have a small improvement--but adults
without health insurance, by zip code, so you can see that
there is still a significant number of people who remain
uncovered.
We have targeted, however, very low-income, childless
adults between 50 and 64, after we realized that they were the
highest spenders and the highest numbers of self--people who
are in the hospital listed as self-pay, without insurance. So,
we targeted this population.
Low-income residents who are HIV-positive, but we covered
them at the point of diagnosis, rather than waiting until
they're disabled by AIDS. And so, they have the opportunity to
have heart therapy and sort of cutting-edge therapy to keep
them healthier longer.
And kids and parents up to twice the poverty level, our
CHIP expansion includes adults, as well as children. We've done
a great job, and have evidence that we've covered just about
all the kids in the District of Columbia who are eligible in
our CHIPs expansion. And, as you hear in the upcoming budget,
we're looking to expand to children up to 300 percent.
All of these expansions make sense on a variety of levels,
in their wise use of District dollars. They dramatically
improve healthcare for our vulnerable residents.
But expanding coverage alone will not work to improve
health. Even if we were able to create universal coverage, not
everyone would have a place to go to get care. The District
must continue to improve the entire system of healthcare
delivery. I think you've heard mentioned what is an initiative
started by the D.C. Primary Care Association. Over half of the
District's residents live in neighborhoods where they don't
have adequate access to a primary care provider. The dark red
areas on this map are federally designated health professional
shortage in primary care shortage areas.
Now, this--the striped--the sort of striped red are
currently under consideration by HRSA, because they--we have
been able to prove that they are medically underserved, as
well.
So, you see, these zip codes encompass about 300,000
residents in a city with just over 500,000 residents. So, it's
a fairly shocking lack of access to primary care in a city with
such chronic diseases.
These, of course, are predominantly on the eastern half of
the city, which, you know, also parallels, if you look at every
chart, poverty, unemployment, chronic disease, and uninsurance.
So, clearly the disparities are shocking for a large number of
people who live in the District of Columbia.
As a result of the coverage expansions, the District's rate
of uninsurance is around about 9 percent, pretty low compared
nationally to the States. But, despite such a low rate, a
number of people depend--a high number of people depend on a
primary care safety-net system. We define a ``safety-net
system'' as providers who see people, regardless of their
ability to pay. We certainly want them to maximize the ability
to collect revenue from insurances, but they guarantee people,
who walk in the door, care, and those are the people that I
represent.
We did start Medical Homes DC, which is an initiative to
strengthen community health centers, to rebuild the primary
care system for the uninsured in the District, and to continue
providing high quality care throughout the healthcare system,
regardless of the ability to pay. To date, DCPCA, with an
investment from the city, of $15 million, which is soon, I
believe, to become $21 million in capital money, we've awarded,
since the fall, $1 million to seven community health centers
for nine planning and capital projects. In addition to
providing technical assistance, we've created something called
the Institute for Primary Care Enhancement to build the
infrastructure of health centers who have been providing free
care, so building their billing systems, their financial
systems, their clinical excellence systems.
These projects have already yielded a new demo suite in one
health center, and other capital expansions are underway. But,
as with all investments, we want to know and measure how we're
succeeding.
We are able to show--and I think this is the most important
part--the impact of the coverage initiatives in creating
greater access to primary care is already making a quantifiable
difference. As part of Medical Homes DC, we conducted one of
the District's first in-depth studies of residents' healthcare
and access.
While wide healthcare disparities continue to exist among
District residents, two key findings are showing that the
recent efforts by city and healthcare leaders are beginning to
reverse troubling trends.
First, transfer ambulatory care-sensitive emergency room
admissions, those hospital admissions that could have been
avoided with proper treatment in a primary care setting, are
decreasing for both children and adults. I've attached some
slides to my testimony to highlight these findings. Six years
ago, before most of Medicaid and the Alliance expansions took
place, children and adults living in high-poverty areas were
being admitted at twice the pace of their counterparts living
in what we call low-poverty areas--I call them wealthy areas,
but, you know--for avoidable causes. Now, when Medicaid
expansions have covered almost every child in the District,
avoidable hospital admission rates for children in high poverty
have dramatically decreased, and rates are nearly the same for
all children, regardless of income.
Looking at adults, we can see that the creation of the
Alliance, avoidable hospitalizations are going down, as well,
among high-poverty areas. Those are not quite as dramatic as
children, but we expect to see that continue.
And I'll talk later, when--I know my time is up, but the
disparity in rates of key chronic illnesses, such as asthma in
children, is beginning to be eliminated, with greater coverage
and access. And we can discuss that more with questions.
But we've brought you lots of maps. We have a lot of work
to do. But we are leveling the playing field, and the D.C.
Primary Care Association remains an innovator in these and
other healthcare reforms. So, we hope to talk about a few of
them later on.
Senator Brownback. Very good. Thank you very much. I'm glad
to hear some of those numbers are improving. I was wondering if
that was the case.
[The statement follows:]
Prepared Statement of Sharon A. Baskerville
Good afternoon Chairman Brownback and distinguished Members of the
committee. My name is Sharon Baskerville, Executive Director of the
District of Columbia Primary Care Association. DCPCA represents safety
net providers and other key stakeholders who are committed to our
mission of creating a community based, primary care focused health care
system that guarantees the District of Columbia residents the right
care, in the right place, at the right time.
DCPCA works very closely with the District government, council and
safety net providers to expand health care coverage to as many
residents as possible, and ensure greater access to primary care
providers.
Covering New Populations in the District of Columbia
Since DCPCA was founded in 1996, health care coverage has been
expanded to over 50,000 District of Columbia residents--the result of a
combination of progressive policies and a city whose pockets of
concentrated poverty have increased like no other over the last decade.
To battle the growing concentration of poverty, the District has been
in the forefront of targeting new insurance expansions to medically
vulnerable communities, while also maximizing its local investment in
health care dollars. Just a sample of these targeted coverage
initiatives include: very low income childless adults between ages 50
and 64; low income residents at the point of HIV diagnosis, rather than
waiting until they become disable by AIDS; and kids and parents up to
twice the poverty level.
The District continues to work toward increasing coverage with the
latest initiative from Mayor Williams to expand Medicaid for children
up to three times the poverty limit--making the District of Columbia
one of the most progressive Medicaid programs in the country.
All of these expansions make sense on a variety of levels--they are
a wise use of District dollars and they dramatically improve health
care for our vulnerable residents.
Health Care Access Not a Coverage Issue Alone: Medical Homes DC
But expanding coverage alone will not work. Even if we were able to
create universal coverage, not everyone would have a place to go to get
care. The District must continue to improve the entire system of health
care delivery.
Over half of the District's residents live in neighborhoods where
they don't have adequate access to a primary care provider. I've
attached a map of the District that highlights where these areas are
located--predominantly on the eastern half of the city, paralleling
higher rates of poverty, unemployment, chronic disease, and
uninsurance. As a result of the coverage expansions, the District's
rate of uninsurance is around 9 percent--pretty low compared nationally
and to the States. But, despite such a low rate, a high number of
people depend on the primary care safety net system--nearly 160,000
individuals, or more than one fourth of our total population.
A key component of making this safety net system work is an
innovative initiative led by the District of Columbia Primary Care
Association called Medical Homes DC. Medical Homes DC is a 10-year
strategic project to strengthen community health centers to improve and
continue providing high quality care throughout the health care system
and regardless of an individual's ability to pay.
To date, DCPCA has awarded $1 million to 8 community health centers
for planning and capital projects, in addition to providing priceless
technical and development assistance. These projects have already
yielded a new dental suite in one health center, and other capital
expansions are under way. But as with all investments, we want to know
and measure how we're succeeding.
Coverage Expansions and Better Access Are Improving Health
In fact, we are able to show that the impact of coverage
initiatives and creating greater access to primary care is already
making a quantifiable difference. As a part of Medical Homes DC, we
conducted one of the District's first in depth studies of residents'
health care and access. While wide health care disparities continue to
exist among District residents, two key findings are showing that the
recent efforts by city and health care leaders are beginning to reverse
troubling trends.
First, trends for ambulatory care sensitive ER admissions--those
hospital admissions that could have been avoided with proper treatment
in a primary care setting--are decreasing, for both children and
adults. I've attached some slides to my testimony to highlight these
findings. Six years ago, before most of the Medicaid and Alliance
expansions took place, children and adults living in high poverty were
being admitted twice as often as their counterparts living in low
poverty for avoidable causes. Now, when Medicaid expansions have
covered almost every child in the District, avoidable hospital
admission rates for children in high poverty have dramatically
decreased and rates are nearly the same for all children, regardless of
income. Looking at adults, we can see since the creation of the
Alliance, avoidable hospitalizations are going down as well among those
in high poverty, though not quite as dramatically as for children. Then
again, while almost every child is now insured, we can't say the same
for adults. Coverage clearly matters.
Second, the disparity in rates of key chronic diseases--such as
asthma in children--is beginning to be eliminated with greater coverage
and access to quality care. Five years ago, there was a stark
difference in rates of asthma depending on whether a child lived in
high or low poverty--almost a five-fold increase for children living in
high poverty. Now, asthma rates have been decreased and are nearly
identical to children living in low poverty.
There obviously remains a lot of work, but it is clear that the
targeted efforts taking place in the District are making improvements
for the medically vulnerable.
The District of Columbia Primary Care Association remains an
innovator in these and other health care reform efforts across the
District. We've recently launched an Adolescent Health Initiative to
get teens and young adults more closely involved in determining their
own health care. We've convened a Mental Health Task Group to work on
improving and more closely integrating primary care with mental health
care services. We're one of the leaders of the Regional Health
Information and Technology efforts to develop health information and
electronic medical record sharing across providers. And we've recently
committed to working with the administration and hospital providers to
develop an Emergency Room Diversion pilot program to help more people
seek care more appropriately in a primary care setting.
As you can see, we remain committed to reforming not just health
insurance coverage, but truly the system that the District of Columbia
residents depend on for their health care needs. Thank you for the
opportunity to testify and I'm happy to answer any questions you may
have.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Senator Brownback. Ms. Gomez, welcome.
STATEMENT OF MARIA GOMEZ, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, MARY'S CENTER FOR MATERNAL AND
CHILD CARE
Ms. Gomez. Thank you, Mr. Chairman and staff. I appreciate
the opportunity to appear before the subcommittee today to
share with you my perspective on the hurdles facing the Latino
community in accessing primary healthcare and health insurance.
My name is Maria Gomez, CEO of Mary's Center for Maternal
and Child Care.
The center was initiated in 1988 as a nonprofit prenatal
care center for immigrant women displaced by the civil wars in
Central America in the 1980s. Today, we are a federally
qualified health center serving over 14,000 families. Our
target population continues to be low income and recent
immigrant living throughout the region of this area.
Mary's Center operates two primary care centers, a school-
based health center and a mobile unit, each located in the
heart of the District of Columbia's immigrant communities. In
addition to our comprehensive family healthcare, services also
include mental health, a mobile health outreach unit, dental
care, a teen program focused on pregnancy prevention and youth
development, home visitation, with an emphasis on preventing
child abuse and neglect, family literacy, and an intensive case
management to facilitate integration and civic participation of
families in their respective communities.
At Mary's Center, we have learned that the lack of access
to care is one of the greatest challenges facing Latinos in the
region, as we have said here today. The lack of access is due
to the high cost of health insurance and the inability of
potential patients to leave work to see a provider and
inaccessibility of being able to get on Medicaid. Workers who
leave work for regular healthcare are, one, not paid, and, two,
fearful that their job will quickly be filled by someone who is
not attending to their healthcare needs.
Our community does not qualify for Medicaid, mostly,
because most are born outside of the United States, many with
very complex immigration status. Even though we are largely
minimum-wage earners, we are ineligible for other entitlement
programs, since, by working at least two jobs, our combined
salaries may be--slightly exceed the Federal income
requirements of 150 or 200 percent in the regional area of the
Federal poverty level.
A community-based research study done last year about--from
about 800 families, by the Council of Latino Agencies in the
District, showed that we are a population with a high rate of
obesity, which translates to a greater potential risk for
chronic disease, including type 2 diabetes, cardiovascular
disease, kidney, prostate, stomach, and colon cancer, along
with an increased risk, of course, of premature death. We are a
population with 20 percent of the women reported being
diagnosed with gestational diabetes. This is nine times the
rate of U.S. Latinas, and 17 and 60 times the rate of white
women in the United States and in the District of Columbia,
respectively.
We are a population with a rising rate of teen pregnancy
and a low rate of abortions. Thirteen percent--as a matter of
fact, 13 percent of the Hispanic births are to teens.
We are a population----
Senator Brownback. What's that percentage again?
Ms. Gomez. Thirteen percent. Thirteen.
We are a population with negligible access to dental care
for the uninsured or Medicaid recipient, and the few clients
that do offer dental care--clinics that do offer dental care do
not have the capacity to perform root canals and more
specialized care.
We are also a population with more than double the national
rate of breast cancer among women.
But there is good news. We are a population with higher
than national rates of screening for HIV/AIDS, breast and
cervical cancer, flu shots among seniors and knowledge about
HIV transmission. This, of course, indicates to us that there
have been some striking successes in the delivery of healthcare
to this community, largely via Latino-serving community health
centers which serve the uninsured.
Some further demographics and health-related data has been
included in your--for the record.
The lessons we have learned in the past 18 years for
improving and increasing the number of Latinos who have access
to healthcare systems are the following:
Using bilingual outreach workers to enroll Latinos in
health insurance programs. It is a community that accesses the
services if they are given to them. They access it early and
appropriately.
Increase the pool of young Latinos going into healthcare
careers, who are the ones who are going to be the most likely
ones to return to the community. I am an example of that.
In the meantime, fund interpretive services to guarantee
clear communication between providers and patients, which
clearly, clearly correlates to the quality of care.
Conduct education campaigns to reach Latinos in health
clinics, schools, churches, and workplaces, using individuals
from the community as the experts.
Fund efforts to collect data on Latinos--Latino health.
Community-based research by Latinos must be done in our own
community.
Expand the pool of private providers and hospitals that
accept patients with Medicaid and the D.C. Health Care Alliance
insurance by providing reimbursement rates that at least cover
the expense of the visit.
Fund, replicate, and expand Latino-serving community health
centers that can have the capacity to stay open extended hours
and weekends.
Promote immigration policies that are civil and humane in
order to guarantee that immigrants are not forced to be in the
shadow, neglecting their health, giving rise to unnecessary
public health illnesses, and increasing the rate of emergency-
room visits and costly curative care.
The data clearly shows that when preventive and primary
care is offered kindly, near their home, and in a culturally
and linguistically appropriate manner, Latinos respond and take
responsibility to stay healthy, working and engaged in their
community.
Thank you for the opportunity to be here with you today.
Senator Brownback. Thank you.
[The statement follows:]
Prepared Statement of Maria Gomez
Thank you, Mr. Chairman. I appreciate the opportunity to appear
before the subcommittee today to share with you my perspective on the
hurdles facing the Latino community in accessing primary health care
and health insurance.
I founded Mary's Center in 1988 as a non-sectarian, non-profit
prenatal care center for immigrant women displaced by civil wars and
earthquakes in Central America. Now a Federally Qualified Health
Center, Mary's Center today serves over 14,000 families with primary
health care and a wide range of wraparound services. Our target
population is low-income families, most of whom are recent immigrants
from all over Latin America.
Mary's Center operates two primary care centers, a school-based
health center, and a mobile unit, each located in the heart of the
District of Columbia's immigrant communities. Our services include
comprehensive family and pediatric health care, prenatal care, mental
health services, a mobile health and outreach unit, dental care, a teen
program focused on pregnancy prevention and youth development, a
nutrition education and supplemental food program, comprehensive
services for young children with special needs, family case management,
home visitation with an emphasis on preventing child abuse and neglect,
family literacy, and vocational training.
At Mary's Center we have learned that the lack of access to care is
one of the greatest challenges facing Latinos in Washington, DC. The
lack of access is due to the high cost of health insurance and the
inability of potential patients to leave work to see a provider.
Workers who leave work for regular health care are (1) not paid, and
(2) fearful that their job will quickly be filled by a another worker
who does not take time off to meet their health care needs.
This is a population that does not qualify for Medicaid because
they are born outside of the United States. And even though they are
largely minimum wage earners, they are ineligible for other forms of
federal assistance, since by working two to three jobs their combined
salaries may slightly exceed the federal income requirements of 150-200
percent of the Federal Poverty Level. For these working poor, WIC--
which has a higher income threshold--is the only staple and constant
food source at their table.
This is a population with a high rate of obesity--which translates
to greater potential risks for chronic disease, including
cardiovascular disease, type 2 diabetes and breast, kidney, prostate,
stomach and colon cancers, along with increased risk of premature
death.
This is a population where 20 percent of women reported having been
diagnosed with gestational diabetes. This is nine times the rate of
U.S. Latinas and 17 and 60 times the rate of white women in the United
States and the District of Columbia respectively.
This is a population with a high rate of teen pregnancy and a low
rate of abortion.
This is a population with no access to dental care for the
uninsured, and the few clinics that do offer dental care do not have
the provider capacity to perform root canals and more specialized care.
This is a population with more than double the national rate of
breast cancer among women.
But this is also a population with higher than national rates of
screening for HIV/AIDS, breast and cervical cancer, flu shots among
seniors and knowledge about HIV transmission. This indicates that there
have been some striking successes in the delivery of health care to
this community--largely via Hispanic serving community health centers
which serve the uninsured.
What are my suggestions for improving the increasing the numbers of
Latinos who have access to the health system? Use bilingual outreach to
enroll Latinos in health insurance programs; conduct education
campaigns to reach Latinos in health clinics, schools, churches and
workplaces; fund efforts to collect data on Latino health; expand the
pool of private providers and hospitals that accept patients who have
DC Health Care Alliance insurance; and fund, replicate and expand
Hispanic serving community health centers. Thank you.
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Senator Brownback. Ms. Reesor.
STATEMENT OF CHRISTINE REESOR, MEDICAL CLINIC
COORDINATOR, D.C. SPANISH CATHOLIC MEDICAL
CLINIC OF CATHOLIC COMMUNITY SERVICES
Ms. Reesor. Good afternoon, Mr. Chairman and members of the
subcommittee.
My name is Christine Reesor. I am a nurse practitioner. I
am the medical clinic coordinator for the D.C. Spanish Catholic
Medical Clinic of Catholic Community Services.
We serve more than 120,000 people annually in the
Archdiocese of Washington, including 30,000 immigrants in the
Washington area. Our D.C. medical clinic provides adult primary
care and outpatient surgical services for people who otherwise
would go without medical care. During fiscal year 2005, the
clinic logged 3,324 patient visits. Our annual budget is just
over $500,000. The clinic employs a staff of 10, and relies
heavily on volunteer physicians and nurses who give generously
of their time and talent. Our medical team provides primary
care and specialty services. The clinic also conducts a host of
wellness and disease prevention and outreach programs in the
community.
Allow me to begin by saying thank you for this opportunity
to testify. I would like to make two main points today.
First, the rising costs of malpractice insurance represents
a major challenge for nonprofit medical clinics like the
Spanish Catholic Center, which serves the working poor, people
who are indigent, and the uninsured.
Second, more attention and resources must be focused on
overcoming cultural, economic, and language barriers that keep
immigrants from seeking medical care.
On the latter, allow me to share a real-life example of
what I'm talking about.
On two occasions in the recent past, clients have come to
the clinics with tubes sticking out of their backs after having
sought care in a local emergency room. In both cases, the tubes
were placed because of obstructions in the urinary system, and
the patients were told to seek specialty follow-up care in 2 to
3 days. Both did not, because of cost and language barriers.
The patients came to the Spanish Catholic Center after 1 month,
with serious infections that could have become life
threatening.
Why did these patients come to our medical clinic? The
major reason is that we are particularly user friendly and
culturally relevant to the growing Latino population of
Washington, DC. The people who come to our clinic find staff
and volunteers who speak their languages, understand their
cultural context, and, in many cases, know what it is like to
be a newcomer, themselves.
In summary, the Spanish Catholic Center Medical Clinic is
an inviting place where immigrants who could otherwise not seek
the medical care can receive affordable care in a compassionate
and culturally sensitive environment. With all humility, this
is a model of service that we should all work together to
expand.
Now, let me turn to medical practice insurance. As I
mentioned earlier, the cost of malpractice insurance is a major
challenge for the Spanish Catholic Center's Clinic. It is our
largest expenditure, outside of salaries.
Again, a real-life scenario. One of our physicians, Dr.
Dierdre Burn, is a former family practitioner in the U.S. Army
who received additional training as a general surgeon. She's
also a Catholic nun with an extensive network of physicians and
medical resources that she leverages for our patients. For
example, she has developed a relationship with Sibley Hospital,
whereby she can perform surgeries for our seriously ill
patients free of charge. Our ability to keep this amazing
surgeon translates into an annual malpractice insurance bill of
$60,000, which is 12 percent of our annual budget.
Given our clientele, costs like these cannot be passed
along to Federal--to people who are already struggling to
access primary care. Mr. Chairman, clinics like ours look to
the Federal and local government for leadership on this issue
to help provide relief from this significant cost.
I would like to close by commending the subcommittee for
assembling this diverse panel. I can attest to the importance
of healthcare alliances. Our medical clinic is part of the D.C.
Healthcare Alliance, which enhances our ability to serve the
poor, working uninsured, and those ineligible for Medicare and
Medicaid. Well organized and financed healthcare alliances
work, and they should be replicated.
Thank you, Mr. Chairman.
Senator Brownback. Thank you, Ms. Reesor, very interesting.
[The statement follows:]
Prepared Statement of Christine Reesor
Good afternoon Mr. Chairman and Members of the subcommittee. My
name is Christine Reesor and I am a nurse practitioner and the medical
clinic coordinator for the DC Spanish Catholic Center Medical Clinic of
Catholic Community Services. We serve more than 120,000 people annually
in the Archdiocese of Washington, including 30,000 immigrants in the
Washington area. Our D.C. medical clinic provides adult primary care
and outpatient surgical services for people who otherwise would go
without medical care. During fiscal year 2005, the clinic logged 3,324
patient visits, with an annual budget of about half a million. The
clinic employs a staff of 10, and relies heavily on volunteer
physicians and nurses who give generously of their time and talent. Our
medical team provides primary care and specialty services such as
dermatology, surgery, nephrology, geriatrics and ear, nose and throat
care. The clinic also conducts a host of wellness and disease-
prevention outreach programs in the community.
Allow me to begin by saying thank you for this opportunity to
testify, and I look forward to your questions on health care issues in
the District of Columbia.
I would like to make two main points today:
First, the rising cost of malpractice insurance represents a major
challenge for non-profit medical clinics like the Spanish Catholic
Center, which serves the working poor, people who are indigent, and the
uninsured.
Second, more attention and resources must be focused on overcoming
cultural, economic and language barriers that keep immigrants from
seeking medical care.
On the latter, allow me share a real-life example of what I am
talking about. ``On two occasions in the recent past, clients have
presented to the clinic with tubes sticking out of their backs, after
having to seek urgent care in an emergency room. In both cases, the
tubes were placed because of obstructions in the urinary systems and
the patients were told to seek specialty follow-up care in 2 to 3 days.
Instead of securing the specialty care--for fear of cost, and
difficulty communicating to obtain the appointment, the patients
approached the Spanish Catholic Center after 1 month, on both occasions
with infections and the need for interventional radiology and specialty
care.''
Why did these patients come to our medical clinic?
A major reason is that we are particularly user-friendly and
culturally-relevant to the growing Latino population of Washington DC.
Partly, it's because we are part of the Catholic Church, which has such
a strong place in Hispanic and Latino countries. Partly, it is because
we are not a government entity, and governments are often not viewed as
trustworthy sources of aid in the countries that immigrants leave.
Churches and non-governmental organizations are often seen as more
reliable and trustworthy sources of assistance. Perhaps most important,
the people who come to our clinic find staff and volunteers who speak
their languages, understand the cultural context they are working from,
and in many cases, know what it is like to be a newcomer themselves. In
summary, the Spanish Catholic Center medical clinic is an inviting
place where immigrants, who would otherwise not seek the medical care
they need, can receive affordable care in a compassionate and
culturally sensitive environment. With all humility, this is a model of
service we should all work together to expand.
Now let me turn to medical malpractice insurance. As I mentioned
earlier, the cost of malpractice insurance is a major challenge for the
Spanish Catholic Center's medical clinic. Malpractice insurance is our
largest expenditure outside of salaries. Again, allow me to give a
real-life scenario. One of our physicians, Dr. Deirdre Byrne, is a
former general practitioner in the U.S. Army who received additional
training as a general surgeon. She is also a Catholic nun with an
extensive network of physicians and medical resources that she
leverages for our patients. For example, she has developed a
relationship with Sibley Hospital whereby they allow her to perform
surgeries for our seriously ill patients free of charge. Unfortunately,
our ability to keep this amazing volunteer depends on our ability to
cover her malpractice insurance--an annual bill of $60,000. And, given
the financial status of our clients, costs like these cannot be passed
along to people who are already struggling to access primary care.
Clinics like ours look to the federal and local government for
leadership on this issue to help provide relief from this significant
financial burden.
I would like to close by commending the subcommittee for assembling
this diverse panel. I can attest to the importance of healthcare
alliances that bring together government, insurance providers,
hospitals, and community-based organizations like our medical clinic.
Well organized and financed healthcare alliances work, and they should
be replicated.
The Spanish Catholic Center participates in the DC HealthCare
Alliance. It enables our clinic to provide free services, regardless of
citizenship or national origin, to the uninsured and severely poor who
are unable to access Medicare or Medicaid. The Alliance guarantees
access to primary care services, specialty referrals, laboratory
analysis, and pharmaceuticals--the exact services needed to support
continuity of care in chronic diseases like Diabetes. In reality, it
reduces emergency room visits by the uninsured, keeps medical
conditions from spiraling out of control, and offers a sense of dignity
to people who can't afford medical care. It also provides our clinic a
modest reimbursement for the services we perform. This is a program we
are happy to participate in, and believe the subcommittee and the D.C.
government should consider strategies that would create new alliances
and expand those that are already successful--like the DC HealthCare
Alliance.
Thank you Mr. Chairman. I look forward to the opportunity to answer
your questions.
Senator Brownback. Mr. Mirel.
STATEMENT OF LAWRENCE MIREL, FORMER COMMISSIONER OF
INSURANCE, SECURITIES AND BANKING FOR THE
DISTRICT OF COLUMBIA
Mr. Mirel. Thank you, Senator Brownback. Thank you for
inviting me, and thank you for all of your interest in, and
support for, the people of the District of Columbia. We really
do appreciate that.
I am Larry Mirel. I'm a partner in the Washington law firm
of Wiley Rein & Fielding. Until October of last year, I served
for more than 6 years as the commissioner of insurance,
securities, and banking for the District of Columbia.
The views I am presenting today are my own, and do not
necessarily represent those of either the District government
or of my present employer.
As commissioner, I became involved in health insurance
issues and tried to find better ways to make insurance coverage
available for the citizens of the District of Columbia. As you
can imagine, that's not an easy task.
Medical providers are being increasingly squeezed, as you
heard a minute ago, between the limited amount of payment that
health insurers will provide and the ever-increasing costs of
medical malpractice insurance. And many of these clinics are on
the edge of financial disaster.
It's hard to think in terms of comprehensive solutions.
What I tried to do when I was commissioner was to deal with two
of the more significant parts of the problem, and those are the
two I want to talk to you about briefly today.
One is the unfair and unreasonable discrimination, in my
view, between people who work for large employers, government
or private, and those who work for small employers or who are
self-employed or who don't work at all. Insurance obeys the law
of large groups, and that says that if you're in a group--
health insurance group that's large enough, you can be covered,
even if you may have health problems. That's because most
people are healthy, and, therefore, their premiums help to pay
the costs of those who are not. If you're in a small group,
however, or if you are self-employed, that logic does not
apply. And if you have health issues, real or potential, or if
you are of a certain age, you may find it very much more
expensive to get insurance, and, in some cases, you may not be
able to get it at all.
Of course, small groups and large groups, as--the
difference is an artificial one. If you lump enough small
groups together, you get a large group. And one of the
initiatives I wanted to tell you about was our equal access to
health insurance law, which essentially would say that everyone
who lives or works or goes to school in the District of
Columbia will be considered part of a large group, and they
will have access to a menu of private insurance plans. It would
be a little bit, Senator, as if the Federal plan, to which you
and your staff belongs, was opened up to everyone, and everyone
had the same kinds of choices. That would be the idea behind
it. That act was introduced--the bill was introduced in the
District Council, but no action was taken on that.
The other--well, let me tell you a little more about that
one before I get into the other initiative.
Some of the problems that small employers have in finding
insurance is due to the difficulty of obtaining insurance for
small groups of people, the need to try to find new insurance
every year, to price it out, to make choices about what kinds
of things to cover, and what things not to cover. Under the
equal access approach, employers would not have to do that.
They would simply be able to take their employees to this
program, where the employees could choose the kinds of plans
they wanted, and the employer would make a contribution of
whatever amount the employer wanted to make.
We think this is an innovative idea. It has been--it is
part of the recently announced program in Massachusetts that
Governor Romney talked about. And we think there is potential
in the District and elsewhere.
The other initiative I want to mention just briefly has to
do with dealing with this problem of medical malpractice
insurance. Many of the clinics are very small, and have very
small budgets, and their ability to find insurance is extremely
limited. What we have proposed is the creation of a captive
insurance plan, a captive insurance company owned by the
District of Columbia that would combine together all of the
malpractice risks of the various clinics and of the District
itself into one company, and that company then could provide
good risk management and could provide good--and has good
bargaining power to get better rates from the malpractice
insurers.
Thank you very much.
Senator Brownback. Thank you, Mr. Mirel. I want to talk
some more about this kind of health-mart concept that you've
mentioned.
[The statement follows:]
Prepared Statement of Lawrence H. Mirel
Senator Brownback, Members of the subcommittee, I am Lawrence
Mirel, a partner in the Washington, DC, law firm of Wiley Rein &
Fielding. Before joining the firm in October of 2005 I served for more
than 6 years as the Commissioner of Insurance, Securities and Banking
for the District of Columbia. The views I am presenting today are my
own, and do not necessarily represent those of the District of Columbia
Government or of my law firm.
As Commissioner I became involved in health insurance issues, and I
spent a considerable amount of time and effort trying to find better
ways to make sure that the citizens of the District of Columbia had
access to reasonable and affordable health insurance. That is no easy
task. Advances in medical science and technology assure that health
care costs continue to rise, as people receive more expensive care and
live longer as a result. In addition the District's unlimited tort
recovery system means that premiums for medical malpractice insurance
go up every year, adding further costs to the system. Medical
providers--doctors, hospitals and clinics--are increasingly being
squeezed between rising costs for medical malpractice insurance and
flat or even declining reimbursement by health insurance companies that
are trying to hold down the cost of health insurance. For some, and
especially those physicians and clinics that serve the poor, the
squeeze is threatening their survival.
Comprehensive solutions are hard to come by. I did undertake two
separate initiatives, however, as Commissioner aimed at ameliorating
some of the more egregious problems with the current system, and I
would like to briefly describe each of them today. Both of these
initiatives are still in the works, so their value has yet to be
proven. But I hope you will agree that they hold out real promise for
improving our health delivery system in the District of Columbia.
The first is aimed at what I consider to be unfair discrimination
between persons who are employed by large employers--private or
government--who have reasonable health insurance options, regardless of
their medical history, and persons who are employed by small employers,
are self employed, or are not employed at all. People in this latter
group have a much tougher time finding decent insurance coverage,
usually pay more for the coverage they do get, and if they have a
history of medical problems may not be able to get insurance at all.
There is no good reason for this discriminatory treatment.
Insurance is subject to the ``law of large numbers,'' which simply
means that the larger the number of people in a group of insureds, the
easier it is to cover them all, even those who have or will have
medical problems. That is because most people are healthy, meaning that
the premiums they pay for health insurance can cover the costs for the
much smaller number in the group who become ill. For those in small
groups, however, or those who are self-employed, there is no large body
of healthy people to share costs with. They pay according to their
individual health status.
This distinction between large and small groups is entirely
artificial. If we lump enough small groups together we end up with a
large group. That is the basic idea beyond a bill that was drafted in
the D.C. Insurance Department known as the ``Equal Access to Health
Insurance Act.'' Under that bill, which was introduced in the Council
of the District of Columbia but has not been enacted, all persons who
live, work, or go to school in the District of Columbia would be
treated as a single group for purposes of health insurance rating.
Members of this large group would be able to choose from among a wide
array of private health plans--HMOs, PPOs, high deductible plans,
etc.--the particular policy that best suits their needs. But they would
pay group rates for those policies and would not be individually
underwritten.
Looked at another way, the legislation would require that the
District of Columbia Employees Health Benefits Plan, which provides a
menu of options at standard rates to all District Government workers,
be opened up to all persons who live, work or go to school here. No
longer would someone who works for a restaurant or small retail
business have fewer choices and pay higher prices for health insurance
than people who work for the District of Columbia Government. No longer
would someone who is self employed be individually underwritten, while
someone with exactly the same medical history but who works for the
District Government pays standard rates regardless of that medical
history.
The Equal Access bill is designed to create a structured market for
providing personal, portable health insurance in the District. Under
the Equal Access bill small employers would no longer have to negotiate
health plans for their employees each year, deciding whether it would
be better to include dental coverage or maternity benefits, and whether
they can afford either. Instead small employers could provide defined
health benefit payments for their employees, and those employees could
then sign up for one of the policies offered under the District-wide
program that would be set up under the act. Not only employers but also
churches, civic organizations and social service agencies could help
their members and constituents purchase insurance through this program.
We think just the ease of being able to access the health insurance
system without having to find, design and negotiate individual plans on
a yearly basis will increase the number of people who are insured.
The legislation would create a District of Columbia Health Benefits
Program, which would be a central clearinghouse through which anyone
who lives, works, or attends an institution of higher education in the
District of Columbia, and their dependents, could obtain health
insurance coverage. Any District employer could designate the program
as its ``employer-group'' health insurance plan for its workers and
their dependents--both those who live in the District of Columbia and
those who live elsewhere. District residents could also enroll in the
program directly.
Once enrolled, individuals would be able to select coverage from a
menu of health insurance plans offered through the program, and could
elect to change coverage during an annual open season.
All of the insurance plans offered through the program would be
private plans offered by health insurers licensed to do business in the
District. They would be regulated by the D.C. Department of Insurance,
Securities and Banking and would have to comply with all applicable DC
health insurance laws, just like any other licensed health insurance
plans. The program itself would operate much like the Federal Office of
Personnel Management does in making private health insurance plans
available to federal employees; that is, it would administer the
offering of a menu of private insurance options.
Although the D.C. Health Benefits Program would be similar in some
ways to health insurance purchasing or pooling arrangements established
by some States, it also differs in that it is designed to be considered
``employer-group'' insurance for purposes of federal tax and employee
benefit law. In extensive discussions with the Federal Departments of
Labor, Treasury and HHS, we worked out a novel approach as follows:
--Any employer could contract with the D.C. Health Benefits Program
to make the program its ``employer-group'' health insurance
``plan.'' For purposes of Federal law, that employer's ``plan''
would consist of the menu of insurance product choices offered
through the program and the premium subsidy provided to its
workers by the employer.
--This means that any contribution made by the employer to the
premium for a policy purchased through the program would be
tax-free to the worker. It also means that employees and
dependants covered through the program would receive all of the
protections afforded by federal law to workers covered by
``employer-group'' health insurance. However, because the
policies offered through the program are personal, portable,
D.C.-regulated insurance products, workers would be able to
keep their coverage when they switch employers.
The program would also operate a payroll withholding system to
facilitate collection of premium contributions by workers and/or their
employers. Employers could choose to augment the coverage offered
through the program with their own, separate, supplemental plans
providing additional benefits such as vision care, dental care, long-
term care, and health care flexible spending accounts.
As the legislation is currently drafted, the program would offer a
choice of 10 to 15 health plans selected so as to offer a choice of
plan types (e.g., indemnity, HMOs, PPOs, consumer directed, etc.). All
plans offered through the program would have to provide major medical
coverage (defined as: hospital benefits, surgical benefits, in-hospital
medical benefits, ambulatory patient benefits, and prescription drug
benefits), and meet the District of Columbia mandates, but within these
broad parameters insurers would be free to design specific benefit
packages in response to consumer preferences.
Policies sold through the program would charge standard, age-
adjusted rates, without underwriting, to all enrollees who had at least
18 months of previous coverage, or who enrolled in the program as part
of a participating employer-sponsored group. Each participating plan
would be free to set its own table of standard, age-adjusted rates,
subject to review by the D.C. Department of Insurance, Securities and
Banking (DISB) to ensure that the rates reasonably reflected the
anticipated costs of the offered benefits.
Persons who joined the program as part of a participating employer-
group would be able to obtain coverage at standard rates and without
underwriting, regardless of previous coverage. Persons who enroll in
the program directly as individuals would be able to buy coverage at
standard rates without underwriting if they have at least 18 months
prior creditable coverage. Individual enrollees with less than 18
months prior creditable coverage could be charged premiums of up to 150
percent of standard rates for up to 2 years and could be subject to
pre-existing condition exclusions of up to 12 months, reduced by the
number of months of creditable coverage.
The program would be a self-governing, separate legal entity,
sponsored by the D.C. Government and subject to regulatory oversight by
DISB. The administrative costs of the program would be financed out of
assessments on participating carriers, apportioned according to the
share of enrollees electing coverage offered by each carrier through
the program.
Any enrollee who ceased to be eligible to participate in the
program by reason of a qualifying event (e.g., employment termination,
divorce, loss of dependent status, etc.) would be permitted to continue
participating in the program for up to 36 months, on the same terms as
other enrollees, regardless of the loss of eligibility.
Insurance agents who brought individuals or groups to the program
would be paid a 5-percent commission by the plans selected by those
individuals. Associations and private social service organizations that
enrolled groups or individuals in the program would be similarly
compensated.
The legislation specifies that the D.C. Government would put its
employees into the program. Thus, the program would start with a core
group of about 30,000 lives (about 19,000 D.C. workers and their
dependents). The presence of this large, stable, initial core group in
the program would be a strong inducement to insurers to participate in
the program and to offer attractive rates and benefit packages. Then,
as private businesses and individuals join the program, its growing
size would make it even more attractive to insurers and encourage even
more vigorous competition for enrollees.
Finally, the Equal Access legislation would also establish a
separate Health Insurance Risk Transfer Pool. The pool would be a
``back-end reinsurance pool'' structured as an industry-run, mandatory
association. It would allow participating carriers to transfer claims
for high cost enrollees to the pool, and then evenly spread those
expenses across all insured individuals. That way, no single carrier
would bear a disproportionate share of the costs associated with high-
risk individuals. This would also permit high-risk individuals to have
the same health plan choices as everyone else.
The pool would be self-governing and financed by assessments on all
health insurance carriers selling health insurance in the District of
Columbia market, both in and outside of the DC Health Benefits Program,
as well as any self-funded employer plans that also elected to
participate in the pool. I have attached to this testimony a copy of
the Equal Access legislation as introduced in the D.C. Council.
The other initiative is designed to help the economic viability of
the network of clinics that serves the District's population, and
especially its less affluent members. Because of the District's
unlimited liability tort system, the cost for medical malpractice
insurance continues to rise astronomically. Obstetricians, for example,
now pay more than $150,000 a year for medical malpractice insurance,
while health insurers hold down the amount paid for deliveries, making
the practice of obstetrics in the District of Columbia financially
unviable.
Particularly at risk in this financial squeeze are the dozen or so
independent clinics that provide much of the city's primary care for
its poorer citizens. Especially since the demise of the old D.C.
General Hospital these clinics have become the major source of primary
health care for a large portion of the city's most vulnerable citizens.
If they were to fold, the people they serve would have no choice but to
take their medical problems directly to hospital emergency rooms--a
most dangerous and uneconomical way to provide the care they need.
Medical malpractice insurance premiums have become a huge burden to
these clinics. I know of one clinic, the Family Health and Birth Center
in Northeast Washington, which provides essential pre-natal, birthing,
post-partum and pediatric care to hundreds of District residents, that
recently saw the cost of its medical malpractice insurance go from
$90,000 to $175,000 in one year. The total budget of this clinic is
only a million dollars a year. These clinics must have malpractice
insurance, if for no other reason than that the District cannot
contract with them to provide their health services unless they do. And
much of their business is done under contract with the District
Government.
In my former position as D.C. Insurance Commissioner I proposed
that the District set up its own medical malpractice insurance
company--a ``captive'' insurer--to cover all medical malpractice risks
to which the District Government is exposed, either directly because of
health services it provides to its citizens or indirectly because of
health services provided by clinics under contract with the government.
Individual clinics have little or no leverage with malpractice
insurers. They are generally so small that there are few insurers
willing to even make them an offer of insurance. They are victims of
the same inflexible insurance ``law of large numbers.'' But the
District Government is a large player, and it can negotiate among
insurers for good rates. By sweeping the private clinics into the
District's own insurance mechanism the clinics can enjoy the better
rates that the District can command, and the District can subsidize
those costs when necessary. Moreover the ``captive'' insurance company
will be able to provide important risk management services to those
clinics. At present the District may be liable for malpractice
committed at those clinics, but because they are independent
organizations the District Government cannot insist that they properly
mitigate their risks.
Currently the District Government is self-insured for tort claims,
including medical malpractice. Since there is no sovereign immunity for
the District Government, and no legal limits in District law on tort
claims, the Government has open-ended exposure for claims of medical
malpractice committed by District employees or contractors. What it
pays out in judgments and settlements each year comes from a
``settlements and judgments fund'' in the District's annual
Congressional appropriation. There is little ability for the government
to control or account for the amount of money paid out each year, or to
engage in the kinds of rigorous risk management that could reduce those
claims. By setting up a wholly-owned captive insurance company, that
would be professionally managed, the District will be able to budget
better and to better manage its liability risks.
By allowing clinics to buy insurance from the captive insurance
company, the District will enable these private entities to realize the
market stability and savings that will come from the pooling of risks
with the Government. Moreover the District will have the ability to
subsidize the insurance costs for those clinics that cannot afford to
pay them without jeopardizing their ability to provide patient care.
Those subsidies will be a bargain for the District Government because
they will ensure that the private clinics will be able to continue
their mission to serve the District's poorest population, without the
need for more expensive and cumbersome programs that the Government
would have to establish if they did not exist. Finally, having a
professionally managed insurance company involved in providing
liability coverage for these clinics will ensure that the best risk
management practices are required, thus providing maximum safety to the
patients of the clinics as well as to the District Government.
Senator Brownback, these are modest but important initiatives that
I believe can help the District provide better medical care for its
citizens on a more rational and cost effective basis. Because they are
innovative ideas they naturally meet with some resistance from persons
who do not understand what they are trying to do, or who are genuinely
concerned that matters not be made worse. But innovation is what is
needed, and these are ideas that will work.
Thank you for giving me the opportunity to appear before you today.
I will be happy to answer any questions.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Senator Brownback. Mr. Haislmaier.
STATEMENT OF EDMUND HAISLMAIER, RESEARCH FELLOW, CENTER
FOR HEALTH POLICY STUDIES, THE HERITAGE
FOUNDATION
Mr. Haislmaier. Thank you, Senator.
My name is Ed Haislmaier. I'm a visiting research--well,
actually, a research fellow, not visiting--at the Center for
Health Policy Studies at The Heritage Foundation. I would also
say two other things. I was born in Columbia Hospital for Women
in the waning days of the Eisenhower administration, so I am a
District native.
So I am a District native, though I grew up in--just across
the line, in suburban Maryland, but then I went to high school
at St. John's, here in the District, and I have been a resident
of Capitol Hill for 15 years. So, what I am testifying on is a
matter of not only professional interest, but of personal
interest. And I should also add that I've had the pleasure of
working, for a couple of years, with then-Commissioner Mirel on
developing some of his ideas and proposals.
Let me make a couple of brief comments excerpted out of my
longer testimony.
Randy Bovbjerg presented data on the uninsured. And there
is much more data out there, both nationally and locally. But I
think what we can do is reduce it down, in my mind, really, to
a couple of points, and that is to say that if--in the case of
any given uninsured person, they--the reason they are uninsured
is one or more of the following three reasons. It's an issue of
affordability or availability or value.
Now, what do I mean by that? Well, for some people, it's
clearly affordability. Even if you made the insurance cheaper,
even if you, you know, made it more available, they still are
going to have trouble paying for it. And that's often the focus
of discussions over policy solutions for the uninsured.
But that's only a subset of the uninsured. For some people,
it's not so much a question of affordability as it is a
question of availability. And this is what Mr. Mirel touched
on, the fact that they work in the kinds of jobs that don't
provide them coverage. And, frankly, the way our system's
organized, that's where most people get their coverage. They
don't fit the pattern that we've operated on in this country
since the 1930s, really--well, late 1930s, early 1940s--of
assuming that everybody goes to work out of high school for a
large employer like General Electric or General Motors, stays
there 30 years, gets all their benefits, and then retires with
a company pension and healthcare.
Now, if you, or anybody you know, doesn't fit that model,
they're at risk of running into these availability problems.
And I should say that I remember talking to some of the Senate
staff, who I know, from previous years, had worked on the HIPAA
legislation Senators Kassebaum and Kennedy put together, and I
said, ``You know, what you guys did in HIPAA was, you made a
great--you did a great job of making sure coverage was portable
if people went from GM to General Electric, but that doesn't
work when going from Home Depot to McDonald's to Joe's Pizza,
that's a one-off.''
Value is the third point. There are people who we know can
afford to buy the insurance, and for whom it is available, and
they simply don't purchase it. In large measure, they don't
purchase it, because they don't value it. There are a number of
reasons why they might not value it. There are rules, in some
cases--I--happy to say not in the District of Columbia--but in
some States there are rules that make the insurance
artificially expensive, and, thus, make it less valuable to
them. In some cases, they just think, ``Hey, you know, I'm
healthy, I don't need it.''
Perversely, to the extent that we have a national policy,
which we do, EMTALA, the Emergency Labor Treatment Act, which
says that, ``If you show up without insurance, you'll get
treated,'' we're rewarding that behavior. We're saying, ``Don't
worry. If something happens, you'll get treated, and somebody
else will pay for it.'' So, you know, if you're young and
healthy, why not skip it?
The fact of the matter is, in any given instance it's
probably a combination of those three. But I think outlining
those three gives us some idea of how we could proceed with a
set of reforms to address the pieces of the problem.
The other key point that I would make in this context is
that the longitudinal research on the uninsured--in other
words, there were studies where they took the uninsured
population, over 4 years--and it was about 85 million, as
opposed to the 40 million reported every year--and they looked,
and they said, ``Well, how do those people's coverage patterns
work out?'' Well, they found only 12 percent were uninsured for
the full 4 years, but 33 percent went in and out, in and out,
in and out of coverage repeatedly. And another 29 percent were
basically covered, but had some gap in the middle. So, right
there, you're looking at two-thirds of these people, if we
could just make the insurance stick to them instead of the job,
you could--instead of to their employer, you could solve a lot
of the problem right there. They would keep the insurance.
Now, how does this come down to what we're talking about
here in the District? The equal-access legislation that Mr.
Mirel was talking about is designed to address the continuity
problem precisely. It is designed to stop pounding the square
peg of small business into the round hole of employer group
insurance, and say, ``Let's make something that fits better for
everybody,'' so that it's employer group insurance for purposes
of it being tax free, but everybody goes into one big pool that
looks like FEHBP, and once a year they get to pick the coverage
they want. The more people you get in there, the more people
show up with insurance, either in public clinics or private
physicians and hospitals, and the money to pay for it.
You then move to the next piece, which is the D.C.
Alliance. I think the District did the absolute right thing in
moving from a provider safety net, which was D.C. General,
saying, basically, ``We'll pay to make sure you don't go
broke,'' to a people safety net, which is, ``We're going to use
the money to make sure people get treatment.'' They need to
take the next step, which is exactly what Governor Romney is
proposing in his State, in Massachusetts, and what the
legislature up there just agreed to, and that is to convert
that into subsidies to buy insurance.
We have the money. It's there. It's the next step. The
equal access provides the framework for it.
Finally, once you have those two pieces in place, I think
the other pieces, which have already been discussed--reforming
the malpractice, helping our clinics get the right
infrastructure so they can get paid by the insurance
companies--I think could really tie the package together very
neatly. And I think, as Mr. Bovbjerg pointed out, it is not
unrealistic to envision that we could, indeed, achieve
universal access here in the District of Columbia.
I would simply say that I think this is a vision in which
the incentives in the system are aligned to put patients first,
in which the health insurers are given incentives to compete
for customers, not just to try to, you know, knock down the
premium by paying providers less, but to meet the needs of
their patients, not the employer; and the providers, of course,
are incentivized to offer the best quality care that they can
to their patients and to create those kind of medical homes and
long-term relationships that we do know do yield better
outcomes and lower cost. I think that it also is a vision in
which patients, providers, and insurers have incentives to
collaborate together to manage appropriately the patient's
care. We know that health--that disease management works best
when the individual is an active co-manager. I think it's a
vision worthy of our Nation's Capital.
Thank you, Mr. Chairman.
[The statement follows:]
Prepared Statement of Edmund F. Haislmaier
My name is Edmund F. Haislmaier. I am a Research Fellow in the
Center for Health Policy Studies at The Heritage Foundation. The views
I express in this testimony are my own, and should not be construed as
representing any official position of The Heritage Foundation.
Thank you Mr. Chairman and Members of the committee for the
opportunity to testify before you today on he subject of access to
primary care and health insurance in the District of Columbia.
I will begin my testimony by offering a perspective on the three
basic factors that contribute to the lack of health insurance coverage.
Then, I will outline the elements of what I believe to be a promising
strategy for expanding health insurance coverage, while simultaneously
creating the right incentives for the health care delivery system to
deliver better quality, lower cost care. Finally, I will conclude with
a number of observations on how such a strategy could be implemented in
the District and the benefits that could result.
There exists a substantial body of data and analytical research on
health insurance coverage, including analyses of the demographics of
the insured and uninsured populations according to various demographic
factors such as income, age, race, sex, geography and employment.
However, the vast majority of that analysis and research can be
summarized by saying that in the case of any given uninsured person,
his or her lack of coverage is attributable to one or more of the
following three basic factors; the affordability, the availability and
the perceived value, of health insurance.
Affordability.--Some of the uninsured simply do not have sufficient
incomes to pay for coverage. Furthermore, even if coverage could be
made less expensive than it currently is, many of those individuals
would still be unable to afford health insurance absent additional
assistance in the form of some kind of public subsidy. The biggest
public policy issue in this regard is the current binary, or ``all or
nothing,'' structure of publicly funded health coverage programs. Those
who qualify get full coverage, while those who do not qualify get
nothing. In the case of the District, this applies to Medicaid, DC
Healthy Families (the District's S-CHIP program) and the Alliance. It
should be noted in passing that the Federal Medicare program works the
same way.
For income-related programs, the reality is that some individuals
with incomes just under a program's eligibility thresholds could
probably afford to contribute something towards their coverage, while
many of those just above the eligibility thresholds will certainly need
some subsidy to afford health insurance. In recognition of this reality
some States have expand their public programs by permitting income-
related ``buy-in'' arrangements. For example, Maryland permits families
with incomes between 200 percent and 300 percent of poverty to ``buy-
into'' S-CHIP coverage for their children by paying a partial premium.
Less common, is the alternative approach of providing qualified
individuals with income-related contributions to subsidize private
coverage.
Availability.--For other uninsured individuals, the issue is as
much or more one of availability as it is one of affordability. In
general, these are persons who lack access to employer-provided
insurance. For many of them the availability problem quickly translates
into an affordability issue. That is because the current system of
Federal tax subsidies for employer-sponsored coverage, combined with
State insurance laws that divide the market into small-group, large-
group, and non-group segments, each with different regulations, make
employer-group insurance significantly less expensive than the
alternative of non-group insurance. However, it is important to keep in
mind that non-group insurance does offer the advantage of coverage
portability, while employer-group insurance is never truly portable.
Thus, were governments to equalize the costs of employer-group
insurance versus non-group insurance through public policy changes, the
purchase of non-group insurance would likely become the preferred
solution for many individuals, particularly those who change jobs more
frequently.
Value.--Finally the principle issue for some of the uninsured is
one of perceived value. Those are individuals have access to coverage
and can afford to pay for it, but still decline to purchase health
insurance (either group or non-group) because they perceive it to have
low value for the price charged (premium). This perception of health
insurance as a ``poor value for money'' can result from several
factors, including:
--Community rating practices that make coverage more expensive for
younger and better risk individuals
--Regulations that prevent the offering of less comprehensive, and
thus less expensive, plans
--A system of public subsidies for uncompensated care that perversely
encourage the healthy uninsured to go without coverage, knowing
that someone else will pay for their treatment should they in
fact happen to need care
--A general market structure that results in the offering of plans
that focus on near-term protection at the expense of long-term
protection, such as by applying underwriting in the non-group
market equally to those with and without continuous, prior
coverage.
Given the interaction of these three basic factors, it is not
possible to simply subdivide the uninsured into three groups. Rather,
the reality for any given uninsured individual is that one of these
three factors is the dominant reason for a lack of coverage while one,
or both, of the remaining factors also influence the coverage decision.
However, this analysis is useful in suggesting a three-prong
approach that policymakers can take to measurably expand health
insurance coverage. The most promising strategy is to systematically
address the three basic factors that produce uninsurance with three
complementary sets of reforms:
Set One.--Undertake reforms designed to moderate the cost of
coverage in general and to permit health insurance markets to better
align premiums with perceived value.
Set Two.--Institute reforms in the ways that health insurance is
bought and sold to make coverage more accessible and available,
particularly for those whose employment patterns do not match the
premise of long-term employment at a large firm offering employer-group
coverage that underlies the current market structure.
Set Three.--Reform public programs to provide subsidies to more
individuals, but scale them according to income and need. Also, convert
existing subsidies for uncompensated care currently directed to medical
providers into coverage subsidies directed to individuals.
The data indicate that many of the uninsured are part-time or
contingent workers, including significant numbers employed by Federal,
State, and local governments and large private employers. Anther
significant share consists of those working for small businesses,
particularly ``micro'' businesses with 10 or fewer employees and the
self-employed. Finally, almost all of the remaining uninsured
individuals are the dependents of workers in the first two categories.
National research also shows that the long-term uninsured comprise
only a small portion of the total uninsured population. A recent study
that looked at the total population experiencing one or more spells of
uninsurance over a 4-year period found that only 12 percent were
consistently uninsured. In contrast, fully one-third cycled repeatedly
in and out of insurance coverage and another 29 percent experienced
coverage gaps during the 4-year period. These results lead the authors
to conclude that continuity of coverage should be an explicit and
principal policy goal for health reform.\1\
---------------------------------------------------------------------------
\1\ Short, Pamela Farley and Graefe, Deborah R., ``Battery-Powered
Health Insurance? Stability In Coverage Of The Uninsured,'' Health
Affairs, November/December, 2003. See also: Short, Pamela Farley,
Graefe, Deborah R. and Schoen, Cathy, ``Churn, Churn, Churn: How
Instability of Health Insurance Shapes America's Uninsured Problem,''
The Commonwealth Fund, Issue Brief No. 688, November, 2003 and Klein,
Kathryn, Glied, Sherry and Ferry, Danielle, ``Entrances and Exits:
Health Insurance Churning, 1998-2000,'' The Commonwealth Fund, Issue
Brief No. 855, September, 2005.
---------------------------------------------------------------------------
The simple reality is that employment-based health insurance only
works well for those who are long-term employees of large firms, and
Medicaid is reliable coverage only for the very poor. Neither system,
alone or in combination, is doing an acceptable job of ensuring health
care coverage for the people who don't fit either of those categories.
The DC Equal Access to Health Insuranc legislation is designed to
make health insurance coverage more readily available to District
residents, and to explicitly promote greater continuity of coverage. It
would create a single ``clearinghouse,'' in the form of a new DC Health
Benefits Program, through which those who live and work in the District
could obtain the health insurance plan of their choice. In the case of
individuals whose employers elected to make the DC Health Benefits
Program their ``group-health insurance plan,'' they would be able to
buy coverage through the program using tax-free contributions by their
employer.
The effect would be that, as those individuals changed employers,
they could keep their chosen health insurance policy and take it with
them from job to job--just as they now do with their auto, home or life
insurance. Thus, as they changed jobs the only thing that would differ
from one employer to the next is the arrangement for paying for
coverage with tax-free dollars. Instead of standardizing the insurance
benefit package, as Maryland and some other States have done in their
small-group markets, the DC Equal Access bill would standardize and
centralize the administrative functions involved in offering a menu of
plan choices, managing an annual open season, handling enrollment, and
transmitting premium payments to the chosen insurers.
In short, the DC Health Benefits Program would provide for all
District residents and participating employers the same kinds of
administrative services that the Federal Employee Health Benefits
Program now provides for workers throughout the Federal Government.
As I noted, studies of the data on health insurance coverage over
time have led researchers to conclude that, ``To the extent that job
turnover undermines coverage stability, designing ways for employers to
contribute to the cost of coverage, without directly administering
health insurance, could enhance continuity.'' \2\
---------------------------------------------------------------------------
\2\ Short, Pamela Farley, Graefe, Deborah R. and Schoen, Cathy,
``Churn, Churn, Churn: How Instability of Health Insurance Shapes
America's Uninsured Problem,'' The Commonwealth Fund, Issue Brief No.
688, November, 2003.
---------------------------------------------------------------------------
The DC Equal Access bill is designed to implement precisely the
solution called for by these researchers. Furthermore, the researchers
also point out how such an approach can provide benefits beyond simply
reducing the number of uninsured. They note that reducing coverage gaps
will also aid efforts to improve continuity of care, which can in turn
result in better health outcomes, improvements in health status and
potentially lower system costs. Specifically, they concluded that,
Efforts to reduce churning in public and private plans or to assure
more seamless transitions from one source of coverage to another would
also enhance the efforts of physicians and other clinicians to provide
effective care. The possibility of changing networks of care, frequent
transitions from one insurance program to another, and losing coverage
entirely are likely to undermine the continuity, timeliness, and
appropriateness of care.
Thus, another, and very important, benefit of the proposed DC
Health Benefits Program is that it would facilitate and reinforce
delivery system initiatives designed to improve the effectiveness of
care, specifically the ``medical homes'' initiative of the District's
primary care clinics.
The design of the Equal Access legislation and the DC Health
Benefits Program would offer a number of other advantages as well.
For example, the DC Health Benefits Program would administer
``premium aggregating'' mechanisms, including a uniform payroll
withholding system, to facilitate the collection of premium payments.
Those mechanisms would be able to combine contributions from multiple
sources. Thus, a two earner couple would no longer have to choose
coverage from one spouse's employer and forgo the coverage contribution
offered by the other spouse's employer. Instead they could combine the
contributions from the two employers and use the total amount to buy
the coverage they real want for their family through the exchange.
Similarly, an individual with two part-time jobs could ask for a pro-
rated contribution from each employer and then combine them to buy
coverage through the program.
With these features in place, small employers would no longer face
the risks and administrative burdens associated with trying to obtain
group coverage for their handful of employees. Rather, a business could
designate the program as its ``group'' health insurance plan and give
its employees whatever tax-free contribution the business can afford to
help them buy coverage.
Under the Equal Access legislation, insurance brokers would
continue to receive commissions for bringing employer groups and
individuals to the program. They would earn their commissions by
providing workers with benefits counseling on picking the best plan for
their personal situations, and by assisting employers in setting up
arrangements, currently permitted under Federal and State tax law, that
make the share of the premium paid by their workers also tax-free to
the workers. While such arrangements are common among large firms,
today small firms rarely offer them.
Furthermore, the Equal Access bill is designed to open up
additional avenues for providing coverage to hard to reach
subpopulations. One provision would allow private social service
entities, such as clinics or church groups to subcontract with the
program to handle enrollment for populations that they serve. Another
provision stipulates that if membership groups bring their members into
the program, that those groups would be paid the same commission as
insurance brokers. In other words, business and professional
associations as well as civic, religious or social service
organizations would be rewarded for ensuring that those they serve get
health insurance coverage. That could greatly augment outreach and
enrollment efforts.
The Equal Access bill would also require the District Government to
take the lead by providing health insurance to its own employees
through the program. This provision would have several positive
effects. First, District of Columbia government workers would gain a
wider choice of coverage options. Second, it would facilitate getting
coverage to those government employees, particularly contractual and
contingent workers, who are currently uninsured. Third, the presence of
such a large number of workers plus their dependents (about 30,000 in
total) would be a catalyst for ensuring the program's success. Insurers
would have a huge market incentive to offer attractive benefit packages
at attractive premiums through the program, while small businesses and
their employees would be eager to join.
Finally, the costs of coverage for the District of Columbia
government workers might actually decline somewhat under such an
arrangement. This is because the average age of workers with
employment-based insurance tends to be significantly higher that the
average age of the uninsured. Thus, expanding coverage to uninsured
workers who are generally younger and healthier should have a favorable
impact on premiums for all covered individuals.
The remaining missing piece of the puzzle is how to address the
needs of the low-income uninsured for whom affordability of coverage is
a major barrier. The good news is that the District took the first step
in the right direction when it transferred the subsidies it was paying
DC General Hospital for uncompensated care to the new DC Healthcare
Alliance. The next step would be to convert the DC Healthcare Alliance
funding into premium support payments to assist the target population
in obtaining personal, portable health insurance through the DC Health
Benefits Program.
That is precisely the strategy embodied in the comprehensive health
reform package given final approval by the Massachusetts legislature
just the other day. The Massachusetts legislation includes a health
insurance exchange that is taken, with some modifications, directly
from the DC Equal Access bill, which we shared with them. But the
Massachusetts bill also takes the next step of converting that State's
present system of provider subsidies, currently paid out of a hospital
uncompensated care fund, into income-related premium support payments.
The final, still missing, piece would be to assist the District's
primary care clinics in creating the necessary infrastructure to accept
insurance reimbursement.
When all of these elements are put together, the vision emerges of
a District of Columbia in which all residents can easily obtain and
keep personal, portable health insurance, those with low-incomes have
the cost of their insurance subsidized through the redirection of
existing public funding, and individuals use their insurance to obtain
necessary medical care provided or coordinated by the doctor or clinic
that is their ``medical home.''
It is a vision in which all of the incentives in the system are
aligned to put the needs of the patient first, in which health insurers
compete for customers by offering the best value for money, and in
which providers compete for patients by offering the best quality of
care at the best price. It is a vision in which patients, providers and
insurers all have incentives to collaborate in together managing the
patient's care to achieve optimum long-term benefits at the lowest
long-term cost. It is a vision worthy of the Nation's Capitol.
Mr. Chairman, that concludes my prepared remarks. I will be glad to
try to answer any questions the Members of the committee may have.
Senator Brownback. Thank you, Mr. Haislmaier.
Ms. Walker, what do you think of this proposal that he's
put out, that you basically have everybody have health
insurance, and if they can't afford it, you subsidize the
purchase of it?
Ms. Walker. Well, certainly we'd--we support the concept,
and we certainly want to do what we can and look at different
options for expanding coverage even beyond what we already
have, which is actually very good.
But we did look into the equal-access proposed model a
couple of years ago, and we have had conversations with Larry
Mirel and others about that. And there are a couple of things
that, kind of, have given us pause. One is that we think it
wouldn't necessarily attract those who really need to be in the
pool, who need to have insurance coverage, because they can't
afford it, they're unemployed. And this is--the equal-access
model goes to people who are employed. And so, that would be a
large group. But even if you look at cost--and we did have
actuarial studies on this--showed that the people who we
believe would be inclined to participate would be those with
higher health risks and would, in fact--could contribute to
higher costs that would make it a little untenable for us to
do.
But we'd be willing to look at it. We certainly would like
to explore some more and really kind of tease it out and see if
maybe, with a subsidy, if there's something that would make
sense. There also are some administrative challenges. And, of
course, the District government is--as a public employer, we
have unions to negotiate with and all of those kinds of things,
so that we'd--we would have to build all of that into a model.
Senator Brownback. Let me get to a finer point on this,
because I'm hearing you say, ``It's an interesting idea, but we
think there's a lot of problems with it.'' How else are you
going to get that remaining 17 percent covered?
Ms. Walker. Well, as I said, we have a couple of--this
year, in the Mayor's budget--or the Mayor's budget proposal for
fiscal year 2007 is to increase coverage up to 300 percent for
all children, which----
Senator Brownback. Would you do that under Medicaid and
SCHIP?
Ms. Walker. Yes.
Senator Brownback. And just go on that model----
Ms. Walker. We're proposing additional--yes, to do it
through that.
Senator Brownback [continuing]. Instead of doing it under
an insurance purchase model?
Ms. Walker. Right, for kids who would qualify at that
level.
Senator Brownback. Okay. Have you looked at the cost of
doing it your way, versus the way I hear Mr. Mirel and
Haislmaier suggest?
Ms. Walker. We had actuarial studies. And I don't know what
the exact dollar comparisons were, but we can revisit those.
And I think our State planning grant group also looked at it
independently.
Senator Brownback. Do you know what the differences are in
cost, Mr. Mirel, for your type idea? Or Haislmaier?
Mr. Mirel. The District, I believe, applied for a grant
from Roger--Robert Wood Johnson Foundation, to do an actuarial
study. And I think that that's in the works. Is it?
Mr. Haislmaier. Yes, I----
Senator Brownback. It seems like, to me, that would be a
very interesting question to ask. Do you get better and cheaper
insurance compared to Medicaid and SCHIP?
Mr. Haislmaier. Yeah, Senator, to answer your question
specifically, the grant that Mr. Mirel's referring to, his
department, while he was still there, applied to the State
coverage initiative project, funded by Robert Wood Johnson. The
city--the department was awarded--these are planning grants.
This is a project of the Robert Wood Johnson Foundation, where
the grants only go to State or local governments for trying to,
you know, get answers to these kinds of questions. The grant
request was to fund an actuarial analysis. We--you know, in the
process of developing--and I know Mr. Mirel had lots of
meetings--I sat in on some of them--with various stakeholders,
including different parts of the D.C. government----
Senator Brownback. Has this been costed out anywhere?
Mr. Haislmaier. A lot of--well, no, the answer is--the
answer is, we--the answer is, it hasn't, but there's $150,000
that the city is currently sending out the RFP for--it's all
been written and sent out--for actuarial analysis to be done to
do exactly that. So, hopefully, in a few months, that will be
done. I don't know where it is in the process. I could check on
that for you. But I know that the RFP was signed off on, the
city has the grant money, and it's been sent out to about seven
or eight different leading actuarial firms to ask them to bid
on it.
Senator Brownback. It would be great for the District to be
the first city in the country that has 100 percent coverage.
Not all that far off, actually, relative to some other areas,
at 17 percent. Now, that last 17 percent can be a killer. But
it looks like this is a reasonable, achievable goal.
I do want to ask Ms. Reesor, in particular about the Latino
population, in which one in three are uninsured. What's the
size of the Latino population in the District? Do we know the
approximate size? Ms. Gomez, do you know?
Ms. Gomez. I think it's about--I'm sorry--I think it's
about 850,000 in the region.
Senator Brownback. But that's--okay, but that's----
Ms. Gomez. Not the District, but just----
Senator Brownback. D.C.'s----
Ms. Gomez [continuing]. D.C.----
Senator Brownback [continuing]. Population is----
Ms. Gomez [continuing]. 60 to 80.
Senator Brownback. 60,000 to 80,000?
Ms. Gomez. Yes.
Senator Brownback. And you're saying one in three are not
covered.
Ms. Reesor, you were saying that a number of those have
kind of complicated immigration status, and that drives some of
this. Is that right?
Ms. Reesor. It's a good question. There are definitely some
who have complicated immigration status. The D.C. Healthcare
Alliance has not made that a consideration in--they are
eligible for Alliance, in spite of that.
Senator Brownback. So, then, that's not an issue. Why are
such a high percentage uninsured in that population pool, if
this isn't an issue? Are they in that working-poor category?
Ms. Gomez. Yes. And I think that that's--that's what's in
my graphs, and I'm--unfortunately, I didn't send them soon
enough to be blown up. But it--they're--it is, there's--a very
large population actually is just above that income of 200----
Senator Brownback. So, if they bounce up to 300 percent,
will that cover a lot of this group?
Ms. Gomez. It might. And I think that one of the things
that I always argue in the city is that it is so extremely
expensive to live in the city that, even at 300 percent of
Federal poverty level, it will be hard for people to be able to
be--you know, to live at that level and qualify for this. And
so, I think, you know, it's--that is one of the big reasons
why, you know, folks don't qualify for this benefit. And now,
in addition to--of course, on the Medicaid side, of course, is
the fact that many of the adults are undocumented.
Senator Brownback. Are what?
Ms. Gomez. Are undocumented.
Senator Brownback. So that they can't qualify for Medicaid,
then, at all?
Ms. Gomez. Not for Medicaid, no.
Senator Brownback. Okay.
Mr. Mirel, how should we address this undocumented
population in the District that's substantial?
Mr. Mirel. Well, part of the equal-access concept is to get
away from strictly employment-based insurance. The way the act
is designed, various groups could put their population into
this plan, even though they are not getting insurance through
their employer. For example, the Spanish Catholic Center could
do so. Mary's place could do so. That is, they could sign up
these people through this plan, and there could be a subsidy
program through the District government to allow them to buy
it, but they would be--they would have available to them
insurance, variety of private plans, at group rates. And that
would be a great advantage, we think, because many of them work
for employers that just don't want to be bothered getting
insurance, or don't get around to it, or they--or the people
who are working for them are working only part time, perhaps
two or three different jobs, and none of--and, therefore, are
not eligible for employer-based insurance. Under the equal-
access concept, they would be able to get insurance through the
D.C. program, with the help of the agencies that serve them.
Senator Brownback. So that it would cover even an
undocumented population?
Mr. Mirel. Yes.
Senator Brownback. Okay. It seems like that's going to be
an issue here and in a lot of urban areas across the United
States, to get that population pool somehow in a system that
can work for them, and work in the country, and be affordable.
Ms. Gomez. Yes. And I think that that's the big piece, is
it's--it really has got to be affordable, because, you know,
you really have to have a very large pool of people to be able
to have the cost. And, I mean, I'm--and I support--I mean, I
think that there's--this population, especially the immigrant
population, could actually benefit from this. But it's the
affordability, again, because even with the two or three jobs,
they're just barely making it.
Mr. Mirel. But we're going to pay for the health costs of
that population, one way or another. We're either going to pay
for them by helping subsidize their ability to buy insurance,
or we're going to pay for them in the emergency room. And it's
a lot better to pay for them through insurance than it is in
the emergency room.
Senator Brownback. Can you document that, Ms. Baskerville,
that we're seeing Latino population in the emergency room that
we're paying for?
Ms. Baskerville. Well, we are certainly seeing both the
Latino, the other immigrant population, and the African-
American population all disproportionately, in the emergency
room.
Let me just say that I don't think cost is the primary
driver of whether equal access works or not. It's a great idea.
We have a 5-page analysis here, that we're happy to submit to
you later on, about what our concerns are.
The reality is that with the chronic disease burden that we
have, and the fact that, you know, we have a system that's now
beginning--a locally funded system with the Alliance, you know,
that's funded, but we, every year, look at whether they're
going to cap it or whether there's going to--I mean, it's hard
to fund out of all local dollars. The funding for this kind of
project, our fear is, will suck up all those kinds of dollars
that do fund some very good programs, to a model that we don't
think speaks to either the poverty level or the burden of
chronic disease level in the city.
So, while you may be a consultant in the city who's
uninsured, and have some options on insurance, if you run a T-
shirt store on H Street, it's not going to help you cover your
two or three employees, because, more than likely, it's not
going to happen. And so, Commissioner Mirel and I have spent a
couple of years debating this back and forth, but----
Mr. Mirel. On a very friendly basis, I must say.
Ms. Baskerville. Yes, very friendly basis. But we think
you'll see some of the subtler issues that we think will make
this an unsuccessful program in the long run. Great idea. But,
in practicality, we don't think it'll solve the uninsured--the
problem of that last 17 percent. And, you know, the number is
always a moving target. We--you know, the Alliance isn't called
``insurance,'' so what--you hear it's 17 percent, but if you
add the Alliance in, it's actually 9 percent. So, you have to
watch those numbers.
It doesn't mean I don't want to cover everyone in the
District of Columbia, but, you know, there are many pieces to
it, and we're attacking all the pieces, including the
malpractice, in all kinds of ways. But we don't have a system
yet. And until we build a system that guarantees whether you're
covered or not, and that we can capture and maximize
reimbursement while guaranteeing care, then none of these
things will do much of anything but draw off resources and
build more administrative cost.
Senator Brownback. Okay. Well, thank you. I wanted to get
this as kind of an overview of where we are in D.C. healthcare.
I know there are a number of people working on different models
of it. And, for me, I wanted to get an overview. I don't have
solutions to put on the table in front of you, but I wanted to
hear what the situation is. And I think you've all identified
it. And it's interesting to me some of the different pieces to
the puzzle that you're looking at. It'll be interesting to see
what this is costed out of going up to 300 percent of poverty,
Medicaid and SCHIP, versus going through a health insurance
model, or maybe you can provide some alternatives. It might be
interesting to try to get that number of uninsured in some sort
of pool or covered in the old system.
And then, we've got a particular problem, too, in the
immigrant population, in any urban area in the United States.
It is in Kansas City, in our urban areas back home, and it is
across the country. And a lot of the not-for-profit groups are
providing that front line of care, but it's a population that
can have some pretty significant health problems, as you
identified in your--pretty significant in quantity and impact.
So, it can be pretty expensive to do, and we need to do a
better job of that.
ADDITIONAL PREPARED STATEMENTS
Thanks for being out today. If you have further statements
that I should hear, please feel free to submit them for the
record.
[The statements follow:]
Prepared Statement of Senator Mary L. Landrieu
Good afternoon, to our panel, and thank you Chairman
Brownback for calling this hearing to discuss the challenges to
adequate healthcare in the District of Columbia. Today we will
hear from government officials who must tackle the day to day
health needs of residents of this city and seek to form policy
which would improve health access for all and hopefully improve
the overall health of this city. It is a tough job, but I am
glad to welcome Deputy Mayor of the District of Columbia for
Children, Youth and Families Brenda Donald Walker who prior to
this post did a tremendous job improving the Child and Family
Services Agency.
In addition today we will hear from local and national best
practice experts and several care providers whose work in the
community is the crux of care in this city. I welcome you to
the committee and thank you for your important work.
This is a listening hearing. We know there is a critical
nation-wide challenge of access to healthcare services,
especially in vulnerable populations such as the elderly and
poor, and also the mass lack of health insurance coverage which
makes care affordable. We know the problem exists. Today I hope
that we can examine the nature of the problem in the District
and some potential areas for the Congress to provide a catalyst
for improvement. The most vulnerable populations in the
District have acutely higher levels than the national average
of chronic illnesses. For example, 7.6 percent of District
residents reported being diagnosed with diabetes in 2002 and
the rate is 6.7 percent nationally. In 2002, over 14 percent of
residents report having been diagnosed with asthma, with the
national median being less than 12 percent. And the most
devastating of all statistics, HIV infection in the District is
10 times the national average (40.1 cases per 100,000 in the
District of Columbia compared to 14.8 cases per 100,000 for the
United States).
This committee is responsible for the state-level functions
in the District--primarily the courts and offender supervision.
However, we have worked with the city to improve another area
of care--the care of abused and neglected children. And across
the country States have stepped in to improve the health of
their residents. Just this week Massachusetts passed a bill to
require all residents to have health insurance, just like
drivers are required to carry automobile insurance. And the
State recognized that affordability is the key barrier to
insurance so they are investing in options to make health
insurance more accessible. It seems the District has taken many
similar steps, such as forming the Alliance, to provide health
insurance coverage for many more residents. But we know there
are gaps in those who do not qualify, do not subscribe, or
cannot afford the only options presented to them. I understand
some of the witnesses today will address the challenge of
insuring the uninsured and I hope we can find some avenues for
relief.
Today 43 million Americans are without health insurance and
nationwide 1 out of every 5 of those uninsured are children. In
the District of Columbia, the rate of uninsured is 12.9 percent
of the population (73,714 people), compared to the national
average of 21 percent. I know in my home State of Louisiana,
even before the hurricanes, more than 813,000 people are
without health insurance, of which 187,000 of those are
children and 80 percent come from working families. In the
District of Columbia it seems there are slightly more uninsured
working families (83 percent), which 25 percent are families
who are at the poverty line. I would like the witnesses to
identify these gaps in health insurance coverage and how to
target working families.
Mayor Williams has worked diligently to provide insurance
to children through the Alliance and the State Children's
Health Insurance Program through Medicaid. For children, the
issue of uninsured children may not be as acute as diminished
access to primary care. I would like our panels today to
address the effect on children, especially of access to primary
care health services.
I understand that regular access to a source of health care
is particularly limited in Wards 7 and 8 (nearly 25 percent of
adults have no regular access). Ward 5 is also limited, with 21
percent of adults with no regular access to health care. Adults
in Wards 1, 4, and 6 do not fare much better, with 15-20
percent have no access to regular health care. I would like to
know what steps the city is taking, and what the outside groups
recommend, in order to improve access.
Chairman Brownback, thank you for calling this hearing
today. We recognize there is a challenge to insuring residents
who are currently uninsured and many more who have limited
access to health care. What we need to determine is how to
overcome these barriers to improve health in the city. I look
forward to the witnesses' testimony and working together with
the city and the Chairman this year.
------
Prepared Statement of The HSA Coalition
Mr. Chairman, and Members of the committee, thank you for
the opportunity to appear before the United States Senate
Committee on Appropriations, Subcommittee on the District of
Columbia on this important issue of providing health care for
the uninsured, and I ask that my statement appear in the record
as if read.
The question of how to best help those who are uninsured
has been addressed by the Federal and State governments,
primarily by S-CHIPs and Medicaid. What has not been explored
is a Health Savings Account vehicle to help the uninsured, and
this testimony may help begin that discussion.
After the failure of the Clinton health care plan, and the
loss of the House of Representatives by the Democrats in the
election immediately preceding the failure of the Clinton
health plan, there remains a general consensus in the United
States that government provided health insurance is certainly
better than no health insurance, but is less desirable and less
optimal than private sector health insurance and care.
Two of the most recent health care reform efforts that have
become law, HIPAA and the Medicare Prescription Drug plan,
contained HSA legislation that has been garnering attention
from employers, banks, insurers, hospitals and doctors. (HIPAA
contained the Medical Savings Account (MSA) pilot program and
the Medicare Prescription Drug plan expanded MSAs in to Health
Savings Accounts.)
While Health Savings Accounts have been in place for a
little more than 2 years, the MSA pilot, which began in 1997
and ended in 2003, yielded some interesting data, specifically
around their attraction to the uninsured.
One of the criteria of the MSA pilot legislation was to
determine if the uninsured would be attracted to purchasing
MSAs, and it turns out, from data collected by the Clinton and
Bush administrations, the uninsured were attracted to MSAs.
While the percentage of uninsured bounced around year by
year, between a quarter and a third of those who purchased MSAs
were previously uninsured.
This trend of converting the uninsured into the insured has
continued during the first 2 years of HSAs. There are numerous
studies that show about a third of those purchasing the HSA
qualified health insurance plan were previously uninsured.
This data should put aside any concerns that HSAs are for
the wealthy, since, in the main, the uninsured are not wealthy.
Essentially, there are a number of reasons MSAs and HSAs
appeal to the uninsured.
The number one reason, without question, is that the health
plans are affordable.
Affordable is a relative term that means different things
to different people, but as the cost of traditional health
insurance has grown rapidly over the last decade, the appeal of
lower cost health insurance has also grown.
The average cost of a family health insurance plan in the
United States in 2005 was roughly $11,100. Of those who have
employer provided health insurance, the average employer pays
for 73 percent, with the remaining 27 percent picked up by the
employee.
However, for those who do not have employer provided health
insurance, the $927 a month family plan is simply
unaffordable--that is--they do not have health insurance
because it is too expensive. In addition, many employers are
finding it difficult to continue to offer their employees
health care, given its rising cost.
This rising cost also makes it difficult for the government
to step in and provide traditional health insurance.
However, the cost of HSA qualified health plan, with a
deductible in the $3,000 range varies by geography, but can be
purchased for between $350 and $450 a month, assuming the
primary insured is in their 40s.
(As merely a point of comparison, a single female in her
30s could purchase a $2,000 deductible health plan for about
$75 a month.)
Furthermore, recent data from both the individual market
and the group insurance market has shown--starkly--that HSA
qualified health plans in the group insurance market have had
premium increases of about 3 percent a year, and the largest
and most recent study of health insurance premiums in the
individual market--where the uninsured are obviously
concentrated--showed that HSA qualified health insurance
premiums dropped in cost 15 percent from 2004 to 2005.
Not only do HSAs attract the uninsured because the health
plans are affordable, but HSAs continue to be affordable over
time. This is no small point. For example, a 3.4 percent
increase on a $400 a month family HSA qualified plan is $13.60
a month, or $163 a year. However, a 9.6 percent increase on the
average cost of a family plan in 2005, which costs $927 a
month, is a monthly increase of $88.99 or an annual increase of
$1,067.90.
One insurer, which participated in the MSA pilot, did not
raise its premiums for the first 5 years they sold MSAs, and in
the 6th year, when they finally did raise their premiums, it
was by 7 percent.
So, we know the uninsured are attracted to HSAs, and we
know that the uninsured purchase HSAs at a higher percentage
than any other type of health insurance, and we know HSA
premiums increase a much slower rate than traditional premiums,
and we know the HSA premiums are affordable.
It is on this basis, that a reasonable approach to helping
the uninsured purchase health insurance may be to consider this
existing preference for HSAs, expressed in the marketplace, by
the uninsured.
There are those who believe that the HSA qualified
insurance is a less desirable product than traditional health
insurance. There are also those that believe a car that costs
twice as much as another car is probably better than the less
expensive car.
But if the car that is less expensive is the only one you
can afford, would you tell the person without a car that they
have to buy the more expensive car, even if it means they will
have to go without any car?
Of course not.
In general, HSAs are attractive to the uninsured because
they provide affordable health insurance, and provide a product
to part of the health insurance market that has been unable to
purchase traditional insurance.
How would a HSA plan for the uninsured work? How could it
work?
HSA qualified plans where the maximum out-of-pocket amount
equals the deductible (for example, after a health plan with a
$3,000 deductible is met, all costs are covered 100 percent)
should be considered.
Assuming that this plan would be directed at the low income
who cannot afford health insurance, a percentage of the federal
poverty level could be agreed upon, and, if for example, this
program was directed at uninsured children, an annual amount
would be provided by the Federal Government to those parents of
children who were uninsured, and who would qualify for the
assistance.
Such an HSA plan would be optional to be chosen by the
parents, who would not be able to have their child enrolled in
such a HSA, and in any other program to assist the uninsured
like Medicaid or S-CHIP.
Insuring children with an HSA plan would make the premiums
very affordable, allowing a reasonable amount of assistance to
go a long way.
For example, if each child had a health plan with a $2,000
deductible, with 100 percent coverage thereafter, then the
Federal Government could pay the insurer on behalf of the
insured, and deposit the remaining funds in the Health Savings
Account that is the child's name, but is controlled by the
parents.
The total amount of the funds allocated by the Federal
Government on an annual basis per child, and the cost of the
premium--which likely would not be significant--would determine
how much of the deductible could be funded by an annual
contribution to the account.
Since the beneficiaries in this case would be low income
and uninsured, any annual dollar amount settled on, should be
high enough to fund the account up to 100 percent of the
deductible.
This means the funds in the account would equal the
deductible, in this case, $2,000, which would be used by the
parents to meet the child's health care expenses, and if the
child had a serious health problem, the health plan would cover
all costs above the $2,000 deductible.
Finally, there are those who assert that HSAs are not good
for the less healthy, and therefore cause ``adverse
selection.''
In fact, adverse selection does not occur with HSAs because
the less healthy do choose HSAs, and have two very good reasons
to do so, one financial, and the other non-financial.
Let's start with the financial reason, again using the
$11,100 cost for an average family health plan in 2005. Those
less healthy would choose an HSA with 100 percent coverage
above the deductible because they assume, correctly, that they
will be into their insurance coverage at some point in the
year.
If the less healthy picked a deductible of $4,000 they
would take $4,000 from the $11,100 they would have to spend on
traditional health insurance, and deposit it into their Health
Savings Account. The remaining $7,100 left would go toward the
HSA qualified health plan, which would likely cost less than
the $7,100 left over from funding their account at 100 percent
of their deductible.
Let's assume that the less healthy would not save one dime
in their HSA, they would spend the entire $4,000--because they
are less healthy.
In comparison, the less healthy could purchase a
traditional health insurance plan with a $500 deductible and a
20/80 co-insurance up to $5,000--meaning the less healthy will
pay $1,500 plus the $11,100 premium, for a total of $12,600.
This is why in some cases the less healthy are better off
financially with an HSA--even if they do not have any funds
left in the account at the end of the year--than they would be
with traditional health insurance.
The non-financial reason that the less healthy choose HSAs
is that they want control over their own health care and they
want the flexibility of the choice of doctors, choice of
treatments to receive, the choice of prescription drugs to
take.
These are highly educated health care consumers, because of
their extensive interaction with the health care system. They
value the control that an HSA gives them. This is the second
reason that HSAs are chosen by the less healthy.
Finally, there have been a number of studies that have
looked at the effects of a high deductible health plan on the
less healthy. One of the most credible and extensive was done
by McKinsey & Company, which found that the less healthy became
more engaged in their health care treatment, more closely
followed their treatment regime, and generally took better care
of them selves.
I believe the financial incentive posed by the money coming
out of their pocket provides an additional incentive to take
better care of them selves--and results in the less healthy
becoming more engaged in their own care, they have a financial
incentive to do so.
Mr. Chairman, it is for these reasons that legislation
should be introduced to make HSAs an option for those who are
uninsured, particularly for uninsured children, with their
deductible funded by the Federal Government through a deposit
into their HSA.
CONCLUSION OF HEARING
Senator Brownback. And we'll be in touch with some of you
as proposals move forward, and just see if there are ways that
we can help out with that.
Thanks for being here. Hearing's recessed.
[Whereupon, at 2:31 p.m., Thursday, April 6, the hearing
was concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
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